Child care allowances to assist lowest paid

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The Independent Online
NEW allowances which will enable working parents on low incomes to claim up to pounds 40 a week towards child care charges come into effect today.

Announcing a pounds 2.2m advertising campaign to encourage take-up, Peter Lilley, Secretary of State for Social Security, said the scheme will benefit an estimated 150,000 families. The Government estimates that in 50,000 families one parent would be encouraged to seek work because of help with child care and 20,000 families which are just above the threshold for receiving in-work benefits will become entitled to them.

Although the move will cost the Treasury a total of pounds 60m a year in extra benefits, it will generate about pounds 30m in increased tax revenue from people enabled to work or work longer hours.

From today working parents who claim Family Credit, Disability Working Allowance, Housing Benefit or Council Tax Benefit, or a combination of these, and who pay for child care for children under 11, can have up to pounds 40 a week in child care charges offset against their earnings when their benefit entitlement is worked out.

For parents who work more than 16 hours a week the scheme means that more in- work benefit can be paid because the earnings taken into account when entitlement is calculated will be reduced.

The result could be worth up to pounds 28 a week more for those on either Family Credit or Disability Working Allowance and as much as pounds 38.20 a week for the poorest families receiving Housing Benefit and Council Tax Benefit.

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