Childcare relief to stay

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The Independent Online

Ministers were in retreat yesterday over plans to abolish tax relief on childcare vouchers paid to working families.

The proposals – set out seven weeks ago at Labour's annual conference – have prompted protests from backbenchers worried that they will cost votes at the election.

The scheme, which is worth up to £2,390, is currently used by 340,000 parents who opt to receive £243 of their monthly pay in vouchers before income tax and National Insurance are deducted. Mr Brown said the tax break would be closed to new entrants in 2011 and then axed altogether in 2015.

But Alistair Darling, the Chancellor, is expected to announce in next month's Pre-Budget Report that it will be retained for basic-rate tax payers and abolished for top-rate earners – who have accounted for much of the scheme's uptake. Ed Balls, the Children's Secretary, said ministers were listening to the protests.