Budget 2013: low-paid working families 'will not qualify for full childcare support'

Think tank finds only four in 10 low-paid families will see 85 per cent of their childcare bill met by the Government

The majority of low-paid working families will not qualify for the full amount of state help towards their childcare costs promised in the Budget, according to the first study of its impact.

The Resolution Foundation think tank found that only four in 10 low-paid families will see 85 per cent of their childcare bill met by the Government.  The findings into question George Osborne’s pledge yesterday that the help for people relying on tax credits will be more generous than at present, and will fuel criticism that his package aids the middle classes more than hard-up families.

Until now, most attention has focused on the announcement on Tuesday that working parents would qualify for 20 per cent tax relief on childcare costs, up to a maximum of  £1,200 a year for each child from 2015.  This will benefit the better off.

Outlining his £1bn plan, the Chancellor said: “To the working parents struggling with the costs of childcare, and the mother wondering whether it makes financial sense to get a job, we offer this: tax free childcare.  New tax-free childcare vouchers for working families: 20 per cent off the first £6,000 of your childcare costs for each child.  And increased childcare support for those low income working families on universal credit.”

The Government has provided £200m  for low income families, so that 85 per cent of their childcare costs would be met under the new universal credit from 2016 — more generous than the 70 per cent under existing tax credits.

But the foundation’s analysis shows that 564,000 low income families (38 per cent) will see 85 per cent of their childcare bills covered but more than 900,000 (62 per cent) would receive only the current 70 per cent— the rebate which applies when one or both parents earn too little to pay income tax. It warned that many part-time workers will miss out.

Vidhya Alakeson, the foundation’s deputy chief executive, said: “Only a minority of working families in universal credit with children – 40 per cent at most – will be eligible for the new 85 per cent rate of childcare support.  The rest have someone in low-paid, part-time work and so won’t benefit.  It is completely wrong that these working families will be excluded from new support at a time when families on up to £300,000 will benefit from childcare vouchers.”

She added: “The Government should be applauded for attempting to help families struggling with the costs of childcare but the truth is that those who are struggling the most are missing out.  We are left with a complex two-tier system of childcare support within universal credit that gives less support to the least well-off.”

The think tank found that just under a third of working families on universal credit with children under five – 164,000 out of 524,000—will qualify for the extra support promised by Mr Osborne.

Julia Unwin, chief executive of the Joseph Rowntree Foundation, said: “Recognising the burden of childcare costs is a start, but the extra help in the new tax-free childcare policy barely benefits those on the low incomes, nor makes up for the shortfall from previous cuts to childcare tax credits.  Knowing support is coming in three years’ time provides little comfort for those who are struggling to make it through to the end of the week. With cuts to benefits and tax rises around the corner, the struggle for millions of poor families shows no sign of relenting.”

The  new scheme will benefit only those two-parent families with both parents working,  and single parents. This led to criticism from Conservative MPs that the Government has neglected stay-at-home mothers.

News
Jacqueline Bisset has claimed that young women today are obsessed with being 'hot', rather than 'charming', 'romantic' or 'beautiful'
people
Arts and Entertainment
Lena Dunham
booksLena Dunham's memoirs - written at the age of 28 - are honest to the point of making you squirm
Arts and Entertainment
A bit rich: Maggie Smith in Downton Abbey
tvDownton Abbey review: It's six months since we last caught up with the Crawley clan
Sport
Frank Lampard and his non-celebration
premier leagueManchester City vs Chelsea match report from the Etihad Stadium
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn unforgettable anthology of contemporary reportage
News
people
Life and Style
A new app has been launched that enables people to have a cuddle from a stranger
techNew app offers 'PG alternative' to dating services like Tinder
Sport
Greg Dyke insists he will not resign as Football Association chairman after receiving a watch worth more than £16,000 but has called for an end to the culture of gifts being given to football officials
football
Arts and Entertainment
Jake Quickenden sings his heart out in his second audition
tvX Factor: How did the Jakes - and Charlie Martinez - fare?
Sport
premier league
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvOnly remaining original cast-member to leave crime series
Sport
Mario Balotelli celebrates his first Liverpool goal
premier leagueLiverpool striker expressed his opinion about the 5-3 thriller with Leicester - then this happened
News
Britain's shadow chancellor Ed Balls (L) challenges reporter Rob Merrick for the ball during the Labour Party versus the media soccer match,
peopleReporter left bleeding after tackle from shadow Chancellor in annual political football match
Arts and Entertainment
Female fans want more explicit male sex in Game of Thrones, George R R Martin says
tvSpoiler warning: Star of George RR Martin's hit series says viewers have 'not seen the last' of him/her
News
i100
News
i100
Sport
Plenty to ponder: Amir Khan has had repeated problems with US immigration because of his Muslim faith and now American television may shun him
boxing
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

IT Support Technician (2nd Line / Server Support) - Bedford

£24000 - £26000 per annum + Benefits: Ashdown Group: 2nd line IT Support Techn...

Teacher

£100 - £130 per day: Randstad Education Chelmsford: Would you like to have a b...

Year 3 Teacher

£100 - £130 per day: Randstad Education Chelmsford: KS2 TeacherWould you like ...

Science Teacher

£100 - £140 per day: Randstad Education Preston: Are you a qualified science t...

Day In a Page

A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world
Apple still coolest brand – despite U2 PR disaster

Apple still the coolest brand

Despite PR disaster of free U2 album
Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments