Universal credit proposals on childcare could discriminate against lowest earners

The Government’s new childcare proposals under universal credit discriminate against the lowest earners who will struggle to afford to go out to work, says Gingerbread.

The Government’s new childcare proposals under universal credit discriminate against the lowest earners who will struggle to afford to go out to work, says Gingerbread.

Under the new universal credit system, parents earning above the income tax threshold (due to rise to £10,000 in April 2014) will be able to claim back 85 per cent of childcare costs. However, those under it will only be able to claim 70 per cent. Gingerbread says this means effectively that families on the lowest incomes will pay double for their childcare.

It adds that with both of the coalition parties reportedly planning to commit to further personal tax threshold rises, even more parents could stop paying income tax, but see their childcare costs double.

Gingerbread Chief Executive Fiona Weir said: “Extra childcare support for families is very welcome – but government plans will leave the lowest earners behind and many will still struggle to afford to go out to work.

“It seems extraordinary that those who earn the least should pay more for childcare. And future increases to the tax threshold will only worsen the problem. That’s why we’re calling on the government to give equal childcare support to all parents under universal credit.”

Gingerbread says that under the new system a single parent with two children working 24 hours a week on minimum wage, needing a child-minder for the hours they are out of the house and their children aren’t in school could pay around £145 per week. Claiming back 70 per cent of childcare costs would see them still having to pay around £45 per week. However, with 85 per cent support from the government the parent would only pay around £22 a week.

The charity is asking concerned parents to join in their campaign to urge Chancellor George Osborne to rethink the policy and commit to the additional investment in next month’s Budget.

More information: www.gingerbread.org.uk/our-budget-for-childcare 





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