BUDGET 2013: Steve Slams Childcare Announcement on Eve of the Budget

(March 19, 2013)

Steve & Stephen Twigg - Broad Square Pupils #1

Steve Slams Childcare Cuts

Liverpool Walton MP Steve Rotheram has slammed the Conservative-Lib Dem coalition government for their Tax-free Childcare scheme on the eve of the Chancellor’s budget.

Steve explained, The Government has announced proposals for a Tax-free Childcare scheme worth up to £1,200 per child. They say this will save a working family with two children under 12 up to £2,400 a year. It will be phased in from autumn 2015 and will ultimately be open to around 2.5 million families with children under 12. From the first year of operation, all children under 5 will be eligible, initially opening the scheme to 1.3 million families, and the scheme will build up over time to include children under 12.

“To be eligible, families will have all parents in work, with each earning less than £150,000 a year, and will not already receive support through tax credits and later, Universal Credit. They will receive 20% – equivalent to the basic rate of tax – of their yearly childcare costs up to £6,000 per child.

“The new Tax-free Childcare scheme will extend support compared to the current system of Employer Supported Childcare or ‘childcare vouchers’. Vouchers will continue for current members if they want to stay in it, but new claimants will get support through the new tax free offer”.

For parents who currently receive childcare support through tax credits and in due course Universal Credit, the Government will increase childcare support to improve work incentives and ensure that it is worthwhile to work up to full-time hours for low and middle income parents. An additional £200m of support will be provided within Universal Credit, which is equivalent to covering 85% of childcare costs for households qualifying for the Universal Credit childcare element where the lone parent or both earners in a couple pay income tax. The details of how to provide this support will be determined as part of the consultation on the scheme for parents not in receipt of Universal Credit, to ensure the two schemes operate effectively together.

“The new tax free offer will be phased in from autumn 2015, partly funded by the phasing out of childcare vouchers. The £200m Universal Credit offer is planned to be phased in from April 2016 as childcare support moves from tax credits into Universal Credit and will be funded from within social security budgets at the time. Details will be set out in future spending reviews.

But the former Lord of Mayor Liverpool joined Shadow Education Secretary and fellow Liverpool MP Stephen Twigg in condemning the plans, “Families in Walton and across the whole of Liverpool need real help with the cost of childcare now, not promises of help in two and a half year’s time. The only people David Cameron is helping now are millionaires, with a massive tax cut in April. He has the wrong priorites at the wrong time for Britain.

“While the Government are promising £750 million of support in 2015, they will also be cutting 10 times as much - £7 billion worth of support for families in 2015. Today’s announcement will not make up for families who have lost up to £1,500 in childcare support through cuts to tax credits.

‘“In total, this Government will have made £15 billion worth of cuts to family and childcare support between 2010 and 2015. This announcement won’t affect any of those cuts before 2015.

Labour is quite clear that we want the Government to provide real help with childcare costs to families now. Last week, the Prime Minister claimed he had found the money for a “very major step forward” on childcare

If the Prime Minister wants to make good some of the damage he’s done, in the current economic climate they should start by providing immediate help to low and middle income parents with child care and family costs by reversing the cuts in child care tax credit which has seen some families lost up to £1,560 a year in support and by extending free nursery hours for three and four year olds from 15 hours to 20 hours.”

Click here to return to the News page