Labour MP for Manchester Central, Lucy Powell has today rounded on Government plans to introduce a childcare tax break for families after research commissioned by the House of Commons Library showed that low income families would not benefit from the measure at all and some middle income families may be worse off than they are under the current childcare vouchers scheme.
Government briefing ahead of the Budget on Wednesday – and building on a fudged announcement on help with childcare costs as part of the Coalition Mid Term review in January 2013 - suggests that parents would be offered up to £2000 childcare tax break per child to help with the rising costs of childcare, to replace the current voucher scheme. It has been suggested that families earning up to £150,000 will benefit. New research by the House of Commons Library into the effects of a tax break modelled on the Government's briefing shows that a family with two children would need a single earner to earn £29,440 in 2013/14 to get the full benefit of the tax relief. Working parents on the lowest incomes with a single earner below £9440 would not benefit from tax relief at all.
Higher rate tax payers would be the main winners of a £2000 tax break as they would be able to take full advantage of the tax relief, and higher rate tax payers currently receive less support than basic rates taxpayers under the current voucher system.
The Government has created a triple whammy childcare crisis which is facing families today. Childcare places have fallen by 18,724 since 2009, costs are rising 6% a year according to a Daycare Trust report published last week and financial support from Government is being slashed. Some low income parents have lost over £1500 per year as a result of cuts to support for childcare through the tax credit system making it harder for families to make ends meet and many others have lost their entitlement altogether.
Lucy Powell MP said: "David Cameron's childcare cheat won't help families facing crisis. Families are being hit by a triple whammy of rising prices, plummeting places and the slashing of childcare support by this Government. And to make matters worse it looks like the Prime Minister's remedy to this problem of his own making will make no difference to low and middle income families. David Cameron's childcare crisis is causing misery for parents and children, squeezing income and making it harder for families to make work pay. The Prime Ministers priority might be helping those at the top but I want to see real action to support low paid mums and dads.