Osborne takes cheap option on child care
'Independent' survey reveals concerns that central plank of mid-term review suits high earners
Andrew Grice has been Political Editor of The Independent since 1998. He was previously Political Editor of The Sunday Times, where he worked for 10 years, and he has been a Westminster-based journalist since 1982. His column, Inside Politics, appears in The Independent each Saturday.
Sunday 23 December 2012
George Osborne will announce tax breaks for child care next month in a move that will benefit better off families significantly more than it helps those on low incomes, according to a study for The Independent.
The Chancellor is expected to overrule Nick Clegg by announcing that parents will be able to write off up to a third of their child care costs against tax. The Liberal Democrats are arguing for an alternative plan which would see the state provide more free care.
Currently, parents of three- and four- year-olds are entitled to 15 hours a week of free care during school terms. The Resolution Foundation, a think tank specialising in low and middle income groups, has warned the Tory plan will help the better off most.
It also warned that the burden of child care is even bleaker for families than previously thought when housing costs are taken into account.
There are fears the announcement, a major plank of its mid-term review, will be dubbed "tax relief for nannies". Critics say it could give the impression the Government is helping better off mothers return to work rather than those on low incomes.
The Lib Dem plan to extend universal help through more free hours won some support from Elizabeth Truss, the Conservative education minister responsible for child care, but has been blocked by the Treasury.
The Resolution Foundation said: "Additional investment in the universal offer is preferable to greater investment in means-tested support through the tax credit or forthcoming Universal Credit system, given that investment in means-tested support reduces incentives to progress in work." Yesterday government sources said no final decision had been taken, and insisted the policy would be fair: "There is no great row. The two Coalition parties want to achieve the same thing. We are working out how to get there." The study found that a family on £39,693 (50 per cent more than the average wage) with two children under five in full-time child care spends 22 per cent of its disposable income on the care, rising to 28 per cent when rent or mortgage costs are included. For a household on £53,924 (twice the average wage), child care soaks up 30 per cent of their disposable income, increasing to 40 per cent when housing costs are included.
It said: "Although the middle income family starts off 79 per cent better off than the low income family, after housing and childcare costs it is almost no better off – only eight per cent ..." The report added: "A second earner on the minimum wage is only £4-a-week better off if she works full-time than if she did not work at all."
Peaches Geldof funeral: Bob Geldof leads tributes at emotional service in same church she married husband Thomas Cohen and mother Paula Yates was buried
Pope Francis ‘told divorced and remarried woman there is nothing wrong with her taking Communion’, Italian newspaper says
Man gives barefoot bus passenger the shoes off his feet
50-year mystery of the ocean ‘quack’ finally solved by scientists
Justin Bieber apologises for visiting Yasukuni Shrine in Japan: Site at centre of international row honours convicted WWII war criminals
Ukip election posters: Nigel Farage defends 'racist' campaign anti-immigration campaign ahead of Europe elections
Ukip leader Nigel Farage defends employing German wife, at launch of anti-immigration poster campaign
Is Britain really a land of God? Furious debate after David Cameron claims we are a Christian country
An open letter to Nigel Farage: you may smile, but I am not seduced
Nigel Farage: Calling Ukip’s posters ‘racist’ is yet another example of shameful Westminster evasion
David Cameron's constituency office calls police on food bank campaigners Bishop of Oxford and Reverend Keith Hebden
- 1 William Shakespeare's 450th birthday: 50 everyday phrases that came from the Bard
- 2 A bottle of wine a day is not bad for you and abstaining is worse than drinking, scientist claims
- 3 Pope Francis ‘told divorced and remarried woman there is nothing wrong with her taking Communion’, Italian newspaper says
- 4 Man gives barefoot bus passenger the shoes off his feet
- 5 50-year mystery of the ocean ‘quack’ finally solved by scientists
Excellent Salary Package: Austen Lloyd: This is a rare high level opportunity ...
Very Competitive Salary: Austen Lloyd: This is an excellent opportunity within...
£80000 - £120000 per annum + Highly Competitive Salary: Austen Lloyd: US QUALI...
Excellent Package: Austen Lloyd: Banking / Finance Associate - We have an exce...