The Government has announced
proposals for a Tax-free Childcare scheme worth up to £1,200 per child. They
say this will save a working family with two children under 12 up to £2,400 a
year.
It will be phased in from
autumn 2015, partly funded by the phasing out of childcare vouchers. and will
ultimately be open to around 2.5 million families with children under 12. From
the first year of operation, all children under 5 will be eligible, initially
opening the scheme to 1.3 million families, and the scheme will build up over
time to include children under 12.
To be eligible, families will
have all parents in work, with each earning less than £150,000 a year, and will
not already receive support through tax credits and later, Universal Credit.
They will receive 20% – equivalent to the basic rate of tax – of their yearly
childcare costs up to £6,000 per child.
It sounds like good news, so
what’s the problem?
Well, first, you might ask is
why this scheme is more than two years away. If it’s so important, why isn’t it
being done now?
Secondly, while the Government
is promising £750 million of support in 2015, it will also be cutting 10 times
as much - £7 billion worth of support for families in 2015.
Thirdly, this scheme will not
make up for families who have lost up to £1,500 in childcare support through
cuts to tax credits. In total, this Government will have made £15 billion worth
of cuts to family and childcare support between 2010 and 2015. This
announcement won’t affect any of those cuts before 2015.
Finally, it will come as no
surprise that at the same time as this government is giving massive tax cuts to
millionaires, it is now introducing childcare support for families earning
£300,000 a year at the same time as it is cutting Surestart schemes all
over the country. It’s good to know we’re all in it together!
