Childcare benefit: Benefit cuts 'could cripple families'

A new report, published by the independent think tank the Resolution Foundation, claims up to 45,000 working families in Yorkshire and the Humber are set to lose an average of 404 a year in support for childcare costs from April 2011, owing to cuts to childcare credit designed to save the Government nearly 400m over the next three years.

The report warns that the childcare cuts could cripple families with already overstretched budgets owing to the cost of living rising high above people's wages.

Linda Riordan, the Labour MP for Halifax, one of the areas expected to be worst hit by the changes, said last night: "This is an attack on struggling families with young children who are not the type of people who can afford it.

"These are hard-working families, they don't get this credit for nothing, they get it because they need it.

"I don't know what will happen to these people without their benefits, but I am very worried.

"Halifax is forecasted to be terribly hit already and if people are going to be losing their jobs as well as their childcare benefits, it is going to be absolutely catastrophic for the area."

The report is into the changes relating to the childcare element of the Working Tax Credit, which is claimed by around 450,000 working households across the UK – most of whom are on incomes below 30,000.

Under the current system, working parents can claim support for up to 80 per cent of the costs of childcare, but from April that figure will fall to 70 per cent.

The report claims some families could lose as much as 1,300 a year in 2011 owing to the cuts, with people in Bradford, Calderdale, Kirklees, Doncaster and Richmondshire, feared to be the worst affected in Yorkshire

The cuts were first announced by Chancellor George Osborne in the October Spending Review, but their full regional impact has not been shown until today.

Coun Ian Greenwood, leader of Bradford Council, where 4,610 families are expected to lose an average of 464 a year, said: "This is an attack that will clearly affect some of the most hard-working families with the lowest incomes – it is absolutely diabolical.

"These are people who are paying their taxes but are not far above the benefit levels and need a bit of support from the state to ensure their children get the best start in life.

"It is these same children who will suffer the most from the cuts and that is an outrage.

"Losing this amount of money makes a huge difference to people's budgets."

Gavin Kelly, chief executive of the Resolution Foundation, said: "For working people on low-to-middle incomes, losses like these will be hard to bear.

"Many parents find support with childcare costs absolutely essential to staying in work, and the big worry is some will now find that work doesn't pay.

"With other work-related costs, such as train fares, now also rising, these cuts couldn't come at a worse time for families.

"Many families are still unaware of the changes, despite the fact that they come into effect in a few months time.

"This was already set to be a tough year for families in Yorkshire and the Humber.

"With wages rising more slowly than inflation, households are going to get poorer, even before these cuts are considered."

The report says the planned reduction in support will save the Government 270m next year, rising to 385m in 2014/15.

A Treasury spokesperson was unavailable for comment.