Childcare aid for 150,000 families

The measure – worth £2,000 a year to working families – was announced by David Cameron and Nick Clegg yesterday as they pledged to make it easier for parents to stay in work despite the soaring cost of childcare.

Families where both parents are in work - but earning less than £150,000-a-year – will receive grants worth 20 per cent of the money they spend on childcare, up to an annual limit of £2,000.

Treasury figures obtained by The Yorkshire Post suggest 156,630 families could benefit from the scheme across Yorkshire when it comes into effect in autumn next year.

The measure has come under fire from some quarters for excluding couples where one parent does not work, however, and for being available to high-earning households with a joint income of as much as £300,000. Labour said overall support for children and families had been cut by £15bn since the coalition came to power, dismissing the promise of a tax break after the next election as “too little too late”.

But Mr Clegg, the MP for Sheffield Hallam, said the scheme would provide a “huge boost” to families across the country.

“These measures will help parents go to work and provide security for their families,” the Deputy Prime Minister said. “This helps children get off to the best start in life.”

The Government has branded the scheme ‘tax-free’ childcare, as it will effectively allow parents to escape paying the basic income tax rate of 20 per cent on childcare costs of up to £10,000.

Self-employed and part-time workers will also now be covered, by setting the lower earnings threshold at £50 per week, and provision will also be made for those running fledging businesses.

To counter criticism that tax-free childcare amounts to a sweetener for many better-off families, the package also includes a £50m boost for nurseries looking after the most deprived three and four-year-olds, with the introduction of a new “early-years pupil premium”.

And in what children’s charity Barnardo’s hailed as a “double victory” for the poorest families, it was confirmed that families claiming universal credit will have 85 per cent of their childcare costs met by the state.

Alison Garnham, chief executive of the Child Poverty Action Group, said the “fantastic” announcement would create “positive work incentives” for lone parents. Fiona Weir, chief executive of single-parent charity Gingerbread, said the extra support would “make a crucial difference for thousands of single parents who struggle to afford to work”.

For Labour, shadow Minister for Children Lucy Powell said: “Of course, any childcare support is welcome – but this Government has done nothing in this Parliament to help parents experiencing a cost-of-living crisis. Childcare costs have spiralled by 30 per cent since 2010, and the Tories have rejected Labour’s plan for 25 hours free childcare for working parents of three and four-year-olds.”

Asked if he accepted Labour’s claim that the coalition had slashed funding for families by £15bn, Mr Clegg said: “No. If you tot up everything we are doing now to support childcare, we are providing about £5bn-worth of taxpayers’ money in one shape or form to support childcare. And what I am talking about today amounts to roughly another £1bn.”

Osborne must hold firm: Bernard Ingham, Page 13.