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."
- 1 The BBC has just done more to eradicate ‘terrorism’ than all our wars since 9/11
- 2 Dog thinks owner is drowning in lake, dives in and tries to pull him out
- 4 Chilling drone footage captures Auschwitz ahead of 70th anniversary of liberation
Auschwitz liberation 70th anniversary: Woman sent to three Nazi death camps describes surviving gas chamber
Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
Greece elections: Greek PM Alexis Tsipras takes aim at 'neo-liberal' Europe as country gears up for prolonged austerity battle
Pornhub star Mia Khalifa receives death threats after being ranked the site's top adult actress
Prince Philip set to be knighted by Australia: Celebrate by reading his greatest gaffes
'We would evict Queen from Buckingham Palace and allocate her council house,' say Greens
French court convicts three over homophobic tweets, in case hailed as a 'significant victory' by LGBT rights campaigners
Greece elections: Syriza and EU on collision course after election win for left-wing party
British Muslim school children suffering a backlash of abuse following Paris attacks
Islamic history is full of free thinkers - but recent attempts to suppress critical thought are verging on the absurd
Leaked documents show Ukip leaders approve NHS privatisation once it becomes more 'acceptable to the electorate'
£30000 per annum + benefits: Ashdown Group: We are recruitment for an Assistan...
£45000 - £50000 per annum: Recruitment Genius: This leading provider of design...
£23000 - £28000 per annum: Recruitment Genius: Would you like to be a part of ...
£35000 - £45000 per annum: Recruitment Genius: This growing successful busines...