Working families will be eligible for childcare payments of up to £1,200 a year from 2015, under a new scheme announced by the government today.
Families earning a maximum joint income of £300,000 will be eligible for payments equalling 20 per cent of their childcare costs, up to a maximum of £1,200 per year.
The money, a key component of tomorrow’s budget, will become available from autumn 2015. It will initially be available to parents with children under the age of five – an estimated 1.3 million families. The government plans to later extend this to all children under the age of 12.
Deputy Prime Minister Nick Clegg said:
“I want to help every family to get on in life…Delivering tax-free childcare is the next step to ensuring all families can work and get on. The rising cost of childcare is one of the biggest challenges parents face and it means many mums and dads simply can’t afford to work. This not only hurts them financially, but is bad for the economy too. This announcement of a £1 billion investment in childcare will make sure it pays to work.”
Gavin Kelly is chief executive of low pay research organisation the Resolution Foundation . He told the Guardian that the new scheme was too focused on higher income families:
“It is absolutely right that the government is making childcare more affordable for families – it is a massive burden for millions of households. However, spending large sums on tax relief that tends to benefit higher-income families does not recognise that low- and modest-income families face the highest barriers to work from childcare costs.”