Families set to lose 30 per cent on childcare subsidies
Janaki Mahadevan
Monday, February 21, 2011
The government's welfare reforms could see low-income families' childcare benefits slashed, a charity has warned.
Low-income families could face cuts of almost 30 per cent to their childcare subsidies under the government's welfare reforms, a leading charity has warned.
At present, low-income parents can receive up to 80 per cent of their childcare costs through the childcare element of working tax credit. Families in receipt of housing or council tax benefit can get as much as 97 per cent of their childcare costs covered.
But charity Family Action has found that the welfare reforms, laid before parliament last week, risk reducing this amount to 70 per cent at best, undermining efforts to get parents back into work.
Sam Royston, policy officer at Family Action, said the government must clarify urgently its policy on childcare subsidies.
"Examining the universal credit white paper, one option that the government seems likely to introduce is a childcare element within the universal credit that will cover 70 per cent of childcare costs," he said. "Because housing and council tax benefits will no longer exist as they will be bundled into the universal credit, there will be no room to give additional help towards childcare costs.
"This means that while a lone parent is supposed to be better off under the universal credit, they might end up worse off if they have to foot significant childcare costs."
Family Action is now calling on the government to introduce a childcare element within the universal credit that covers at least 80 per cent of families' childcare costs.
Royston added: "We know the government wants to increase parental employment for good reasons. But parents need to make work pay for their children and we think this undermines that."