To the Point: But will it happen?
Vidhya Alakeson, deputy chief executive of the ResolutionFoundation
Friday, April 5, 2013
In last month's Budget, the Government unveiled its long-awaited childcare reforms.
The tax relief that had been talked about did not materialise and instead the Government offered all families outside Universal Credit with working parents a voucher worth 20 per cent of their childcare costs up to £1,200 per child.
For those eligible for Universal Credit, the Government is proposing to increase support to cover 85 rather than 70 per cent of childcare costs if parents in the family earn over £10,000 a year - the threshold for paying income tax in 2015. Now that the dust has settled, three things are clear about the direction the Government has taken.
First, better-off families are the winners. Of the nearly £1 billion of new money available for childcare, three-quarters went to families in the top half of the income distribution and only £200 million to those on low and modest incomes. Of course, childcare costs eat up a large chunk of what middle income parents earn and those who fall just outside the tax credit system currently receive little support. The new voucher will provide relief but the same level of support will also be available to working parents earning as much as £300,000 a year, while many part-time working parents will miss out on the 85 per cent support because they do not earn enough to qualify.
Second, by only extending support to families in which all parents work, the Government has prioritised dual-earning families over parents who stay at home. This angered many stay-at-home mums who argue that Government is reducing choice for families by penalising those who choose to look after their own children.
Third, the proposals have made our funding system more complicated. Low and modest income parents face different levels of eligibility to childcare support within Universal Credit depending on how much they earn. Added to this is the funding that goes directly to providers for the free entitlement.
And how much of what was announced will be implemented? The proposals will be subject to consultation. More important, none is due to be introduced before the next election when it is anyone's guess who will be running the country.
