Budget: Childcare cost plans come under fire

GOVERNMENT plans to help parents with the cost of childcare came under fire yesterday from charities who said they would do little to help those most in need.

Under the plans, set out on the eve of the Budget, families where all parents work will receive up to £1,200 a year towards care for each child – up to a maximum of 20 per cent of their annual costs – so long as no parent earns more than £150,000 a year.

But the tax-free scheme, which replaces the existing employer-supported childcare (ESC) voucher system, does not come into effect until late 2015.

Low and middle-income families claiming tax credits will remain on a separate programme where increased support does not come on stream until a year later, while those where one parent does not work or has a part-time job will receive nothing.

Ministers said that 1.3 million families will initially benefit – compared with 450,000 under ESC – eventually rising to around 2.5 million as the scheme is extended from under-fives to under-12s.

Charities working with children and the poor welcomed the scheme as a step in the right direction, but criticised the delay in its implementation and the failure to give more help to the poorest families.

Barnardo’s noted that four-fifths of the funding is directed at the tax-free scheme for parents earning up to £150,000, while just one-fifth will go to lower earners on universal credit, who must wait until 2016 to see support rise from 70 per cent to 85 per cent of the cost of childcare.

The charity’s assistant director of policy Neera Sharma said: “Worse still, parents working part-time for the minimum wage will not benefit from this scheme at all.”