Tax-free childcare for wealthy families should be cut to raise funds to help the poorest children, according to a new report.
It suggests that up to £238 million could be saved if the Government’s new childcare vouchers scheme was limited to families with parents earning £60,000 or less.
Under the proposals, which are currently being consulted on, families where both parents work could get tax breaks worth £1,200 per child. The vouchers will be available to parents earning up to £150,000, so a couple with a combined income of £300,000 could claim them.
A new report published by the Policy Exchange think tank recommends that this cap is lowered, and that the money saved is ploughed back into raising the quality of childcare for pre-schoolers from deprived backgrounds. Reducing the threshold to £100,000 will save £52 million, lowering it to £75,000 will save £145 million and cutting it to £60,000 would save £238 million, it says.
Under the lowest threshold, families with two parents working, with a joint income of £120,000 would be eligible under the think tank’s recommendation. Children’s centres, local councils and other groups could bid for funding to use to raise the quality of childcare in poorer neighbourhoods, the report suggests.
It says that while it backs the Government’s move to ring-fence money to pay for free early years education for poor two-year-olds, more needs to be done to ensure that these youngsters are getting high-quality childcare and education. “Government should therefore consult on lowering the cap on parental income eligibility for tax-free childcare, and reinvest the money in a time limited pot of seed funding that local authorities, early years providers, or individual children’s centres could bid for with a specific evidence based proposal in order to raise the quality of childcare in deprived areas.”
The Policy Exchange also calls for Children’s Centres, which used to be known as Sure Start Children’s Centres, to return to their original mission of helping families in disadvantaged areas.
Between 2004 and 2010 there was a massive expansion of the Centres, which were first set up under Tony Blair’s Labour government, with an aim of having one in every community by 2010. The report says that since 2010, funding for these Centres has been cut by 28%. But it adds that despite the cuts, only 35 Centres had closed by last April – around 1% of the total – with other Centres merging. Around two thirds (67%) of the UK population live within a mile of one of the Centres.
Study author Harriet Waldegrave said: “We should be concerned about children – mostly poor children – who are falling behind at a young age. Their potential to grow into happy, talented and not to mention economically productive adults is being squandered. But if we are going to maximise the chances of Children’s Centres breaking the cycle, the limited funds we have to do this need to be focused on children in the most deprived areas.”
A Government spokeswoman said: “Tax-free childcare will help working parents by giving them more choice and better access to the quality, affordable childcare they need. Once fully up and running, the scheme will be available to up to 2.5 million families and will save a typical working family with two children under 12 up to £2,400 per year. However, the overall system of childcare support remains focused on lower income families, who can claim up to 70% of their childcare costs through working tax credit. In addition, we have extended the free entitlement to the 20% most disadvantaged two-year-olds, and from September 2014 this will be extended … around 40% of two-year-olds will be eligible for 15 hours a week of free early education.”
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'No childcare vouchers for wealthy'
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