Childcare costs soar despite tax break

Bills have risen by a third since the coalition came to power

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Indy Lifestyle Online

Families will still pay hundreds of pounds more a year in childcare costs under the coalition despite its flagship tax break for families, new research claimed yesterday.

David Cameron and Nick Clegg unveiled details of their tax break last week, saying it would save families up to £2,000 a year in payments to nurseries and childminders.

But new analysis by Labour shows that the soaring cost of childcare, which has risen by a third since 2010, and cuts to tax credits mean that a typical family will still be out of pocket by as much as £800 a year in comparison to when the coalition came to power. Labour claimed this amounted to "Cameron's Childcare Con".

The figures, based on data from the Treasury and the Family and Childcare Trust, show that over a year, a British family spends an average of £5,487.04 for a part-time nursery place for a child aged two and over, £1,298.46 more than in 2010. On top of this, the average family has lost out on £548.70 in childcare tax credits since 2010 because of changes to the system – meaning a loss of £1,847.16 per year. Because the new tax break will meet 20 per cent of a family's annual costs, this typical family would receive £1,097.41 of support – meaning they are spending £749.75 more on childcare in a year now than they did in 2010.

Ed Miliband has pledged to extend free childcare for three- and four-year-olds from 15 hours to 25 hours a week for parents in work, in addition to the Government's tax break, as well as a "primary childcare guarantee" to provide cover for before and after school childcare.

Labour spokesperson Lucy Powell said: "Parents facing a cost-of-living crisis will see straight through this con. It just doesn't make up for how much more families are paying for childcare under this government."

The Treasury did not respond to requests for comment.