Brown's pounds 1.5bn to placate backbenchers

Click to follow
The Independent Online
GORDON BROWN will spend up to pounds 1.5bn in next month's Budget to placate Labour backbenchers who protested over cuts in lone-parent benefits.

Although there will be no restoration of the cut, there could be half a billion in payments of pounds 5 per week for all families on Income Support. There will also be a new scheme costing about pounds 1bn which will pay up to 75 per cent of the childcare costs of the poorest families.

At present, childcare costs for up to two children under 12 are deducted from parents' earnings when they are being assessed for Family Credit. This means, for example, that a family with two children aged eight and 10 who bring home pounds 150 per week and pay pounds 50 for after-school care gets pounds 25 towards the cost. A family with four children aged three, seven, 13 and 17 earning pounds 300 per week but paying pounds 80 per week for a nursery place, plus pounds 20 for an out-of school club for the seven-year-old gets pounds 40. A single parent with a child under 11 earning pounds 120 per week and paying pounds 50 for child care gets an extra pounds 30.

Now Family Credit, payable to those earning up to pounds 13,000, is to be replaced by the Working Families' Tax Credit, payable to those earning up to pounds 20,000 according to some reports.

Under the new proposals families will receive rebates on their tax, either directly or in their pay packets. With a limit of possibly pounds 100 per week, they could receive help for one or two children on a sliding scale with smaller payments to the better-off. Details of how this sliding scale will work are not yet clear, but it seems likely that the first of the two families above might receive a contribution of up to pounds 37.50, an extra pounds 12.50 per week, while the second family might receive up to pounds 75, an extra pounds 35 per week.

The Government's new proposals are designed to help all poor families rather than singling out lone parents, although there is evidence that it costs more to bring up a child alone.

Labour MPs who rebelled against cuts in lone-parent benefits welcomed the move, though. Audrey Wise, member for Preston, said the portents of the past few days were "very hopeful," She added: "I think we are going to be able to infer that the Government has listened, and I am in favour of governments who listen."

Figures published yesterday showed that the number of lone parents on Income Support fell by 40,000 in the year to last August, to 1.01 million.