Childcare plan 'will include carers'








Nursery classThe UK has some of the highest childcare costs in the world


The government says it wants to expand a new childcare tax credit scheme to include parents who stay at home because they are carers.

A 12-week consultation on the system – which was first announced in March’s Budget – is expected to start later.

Families with two working parents on less than £150,000 each would be able to claim up to £1,200 a year per child.

The government has said the scheme will help 2.5m families, but Labour says families have seen a cut in support.

Chancellor George Osborne said the scheme – which will also include those on maternity or paternity leave – would give working parents “more choice and better access to the quality, affordable childcare”.

“We want to make the new scheme work in the way that is best for parents, so today we are asking for their views,” he added.


Begins in 2015

The UK has some of the highest childcare costs in the world, with many people with two or more children saying it does not make financial sense for both parents to work.

When the scheme was announced, Prime Minister David Cameron said the plans, expected to cost £1.4bn, would be a “boost direct to the pockets of hard-working families”.



Lisa Frederiksen with her son, Casper



Lisa Frederiksen, from Epsom, Surrey, was “staggered” by childcare costs for her children Casper, four, and Elizabeth, two.

She said: “As a career-orientated woman, when I had my first child at the age of 40 I was staggered at the cost of childcare.

“My employer would not agree to a part-time role, so I was faced with childcare costs of £1,200 per month.

“After my second child, it became apparent that working was not going to pay. With two lots of childcare and the costs of commuting, it just wasn’t worth working.

“My Danish husband’s family cannot comprehend the cost of childcare here. They pay £300 a month for care in well-equipped, carefully staffed nurseries.

“This new scheme is a drop in the ocean, but we need a radical rethink.”



Chief Secretary to the Treasury Danny Alexander said: “The government wants to build a stronger economy and a fairer society and key to that is getting more people into work. We won’t let childcare costs stand in the way of parents’ ability to work if they want to.”

Details of the scheme will be set out following the consultation, but the new system is expected be phased in from autumn 2015, with children under five helped in the first year. The scheme will then build up over time to include all children under the age of 12.

To be eligible for the new support both parents will have to work – or one parent in the case of lone parent families – and each parent must be earning less than £150,000 a year.

But in two-parent families where one parent does not work, families will not receive support.

Critics say it will penalise stay-at-home parents.

Neil Leitch, chief executive of the Pre-School Learning Alliance, which represents childcare providers, called for universal childcare provision for all families.

He said: “This tax break does nothing to support those who choose to sacrifice their salary and put their careers on hold to stay at home and look after their young children.

“This seems to be more about dangling a £1,200 carrot to tempt mums back to work.”

Katie O’Donovan of parenting website Mumsnet welcomed the scheme but also highlighted concerns over households where only one parent worked.

“A couple could earn £300,000 a year and still benefit. That doesn’t seem sensible and is inconsistent with other cuts, such as those to child benefit and to childcare tax credit,” she said.

Under the proposal, parents will be required to open an online voucher account with a voucher provider and have their payments topped up by the government.

For every 80p families pay in, the government will put in 20p, up to the annual limit of £1,200.

The vouchers will be valid for any Ofsted regulated childcare in England and equivalent bodies in Scotland, Wales and Northern Ireland.

Half of the funding for the new scheme will come from the abolition of the previous system of employer-supported childcare vouchers – which is provided by only about 5% of employers – and in part by funding switched from elsewhere in Whitehall.

A separate scheme will provide funding for parents who claim universal credit. It will see the state will cover up to 85% of their childcare costs, up from 70% at present.

Sharon Hodgson, Labour’s shadow minister for children and families, said: “Only David Cameron’s government could be so out of touch that they expect families to be grateful for help with childcare in 2015 when they’ve already seen costs spiralling and support taken away.

“This government has hit hardworking parents. Families with two children have already lost up to £1,500 in childcare tax credit.

“This government promised to be the most family-friendly ever, but hardworking parents have lost out while millionaires get a tax cut.”















Tax-free childcare: Examples for two-child families


Earners

Annual claim back limit

Details

Source: HM Treasury
KEY: Orange figures represent individuals not eligible for tax credits/universal tax credit.
Green figures represent individuals eligible for tax credits/universal tax credit.




figures

One income of £120,000, one of £80,000


£1,200 per child


Two parents working full-time with annual salaries up to £150,000 each will be entitled to claim back 20% of childcare costs, with a maximum of £1,200 per child aged under 5, eventually rising to under-12s.




figures

Single parent earning £60,000


£1,200 per child


A single parent working full-time, who does not qualify for tax credits or universal credit, earning up to £150,000 will be entitled to claim back 20% of childcare costs, with a maximum of £1,200 per child.




figures

One income of £60,000


£0


If one parent works and the other does not, and the family does not qualify for tax credits or universal credit, they will not be able to claim.




figures

Two incomes of £12,000 each


85% of childcare costs


Two low-income workers who qualify for tax credits or universal credit and earn over the income tax threshold (set to be £10,000) will be able to claim 85% of childcare costs. The same applies to single parents.




figures

One income of £12,000, one of £8,000


70% of childcare costs


Families where both parents work, who qualify for tax credits and universal credit and one parent earns above the income tax threshold (set to be £10,000) and the other does not, will be able to claim 70% of childcare costs.


Source Article from http://www.bbc.co.uk/news/uk-politics-23565469
Childcare plan 'will include carers'
http://www.bbc.co.uk/news/uk-politics-23565469
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