Childcare tax benefits for working mothers

Gordon Brown, in his first pre-Budget statement since the birth of his son, announced a raft of measures to help children, including a billion pound increase in child tax benefits.

Mr Brown, whose son John was born in October, announced that parents who employ registered child carers in their home will for the first time qualify for government help.

The Chancellor also launched moves to establish nurseries at work and help parents with young children pay for child care regardless of their income.

In a new incentive for mothers to return to work, employers will be allowed to offer £50 a week to staff for child care without paying national insurance contributions. Employees receiving the money will not have to pay national insurance.

Nannies could also be subsidised by the government for the first time under plans to extend the definition of a child carer following a review.

Such a decision would address accusations that the Treasury has penalised parents who employ nannies in their home by excluding them from government aid.

Mr Brown said: "It is time to begin to face up to a long-standing grievance: that financial help for approved child care be offered not just to some families but available right up the income scale to working families facing childcare costs."

He said that childcare places would double from 750,000 in 1997 to 1.5 million by 2006.

From April the child tax credit will rise to up to £3.50 a week per child for the poorest families. A family with two children could receive up to £100 a week in government help. The extra cash would benefit up to 7.2 million children, Mr Brown said.

"Nothing is more important to the future of our whole country than that, with the best schooling, services and financial support, every child has the chance to develop their potential to the full," he said. "For mothers and fathers struggling to balance work and family responsibilities, help with childcare costs - once available to only 47,000 parents in 1997 - is now available to almost 300,000."

To help improve conditions for pre-school children, the Chancellor yesterday confirmed that 1,000 Children's Centres will be opened throughout the UK. The centres, which will range from nursery-style creches to support groups for parents and community centres with books and educational toys, will build on the Sure Start scheme for children from deprived homes.

Mr Brown also announced that, in 500 low-income communities, support will be offered to help to teach pre-school children to read.

The announcement was welcomed by child welfare groups who said it showed Mr Brown's "solid commitment to tackling child poverty." But they warned extra cash for parents would be needed if his target to halve child poverty is to be met.

"We are extremely pleased with the extra help for low income families and the priority given to investing in children and their future," said Martin Barnes, director of the Child Poverty Action Group. Bodies representing single mothers also welcomed the extra cash and boost for childcare.

But Steve Webb, Liberal Democrat work and pensions spokesman, warned that half a million families are still not claiming child tax credits they are entitled to receive. Many who had claimed the tax credit have had payments "messed around" for months by Inland Revenue, he added.

'This is not enough for my employer'

Like most working mothers, Michelle Thornhill constantly juggles childcare with the demands of her job. She hopes that Gordon Brown's incentive to employers to provide £50 a week tax-free to staff will make a difference to her life, but she doubts whether many employers will embrace the idea.

"The money may be free of employer National Insurance, but this is not enough for employers. Unless it is cost-free to the company, I don't think they will bother," said Ms Thornhill, 37, who manages the accounts of a graphics company.

Her firm has just 50 employees and she does not think her boss would be interested in investing money in staff in this way.

She said: "Bigger companies such as British Telecom may be tempted by the scheme, but smaller companies won't."

This is frustrating for Ms Thornhill because any extra financial help would be welcome. Some £130 a week of her salary goes on childcare.

Her nine-month-old son, Kieran, spends his days being cared for by a childminder. Her daughter, Tia, aged five, started primary school in Blackheath, south London, in January.

At present, Ms Thornhill's typical day is a "juggling nightmare" as she attends to her children's needs. She ferries them to school, the childminder's and after-school clubs, sharing the responsibilities with her husband Douglas as much as possible, while holding down a full-time job. She says: "Logistically, it is very difficult. I feel like I'm on the verge of a nervous breakdown most of the time."

"It obviously does put some strain on our relationship" she said.

Genevieve Roberts