MPs give go-ahead to tax-free childcare plan

By The Press Association18th November 2014News EnglandChildcare, News England

Government plans for tax-free childcare have cleared the Commons unopposed.

The Childcare Payments Bill was granted an unopposed third reading by MPs after the Government saw off two Labour amendments tabled at report stage.

Under the Bill, the Government would provide 20% support on costs up to £10,000 per year for each child via an online account

The plans mean that for every £8 a parent pays for childcare, the Government will contribute £2, with support capped at £2,000 per child per year.

Treasury Minister Priti Patel said: “This scheme will significantly broaden access to childcare support.

“Hundreds of thousands of families who were excluded from the current employer-supported childcare scheme will be able to benefit from this scheme and up to 200,000 self-employed parents will have access to childcare support.

“We have paid particular attention to designing the scheme so that it suits the needs of part-time workers.

“To qualify for support, parents earning as little as £52 a week averaged over a quarterly entitlement period, or averaged over a tax year for self-employed parents, will qualify.”

She added that the cost of childcare had stabilised under the coalition Government, following years of significant increases.

Ms Patel said: “The Government’s overall system of childcare is there and remains focussed on those on lower incomes… we are concentrating on supporting families getting into work, ensuring, as well, that work pays.

“As a result of this Bill, more working families than ever will be eligible for support from Government with their childcare costs. Our proposals have been welcomed by childcare providers around the country and it represents an important part of the Government strategy to get people into work.”

Shadow minister Catherine McKinnell said Labour welcomed the Bill but warned it came too late for many families.

She said: “Any new investment in childcare and in particular extra support for struggling families up and down the country who we know are battling to juggle their work and family lives is clearly welcome.

“But it is long overdue for thousands parents – and we remain fundamentally concerned the Bill simply will not address the situation in which so many parents have been left, because the evidence is now overwhelming that cumulative changes to tax and benefits over this Government’s time in office have hit families hardest of all.

“We know from our own analysis of official statistics that some families where both parents work will be £2,000 a year worse off on average by the time of the next election as a direct result of this Government’s tax and benefit choices.

“This Bill will not go anywhere near far enough to make up the shortfall families are facing – in part due to the tax and benefit changes but also due to soaring childcare costs.”

During report stage debate, Ms McKinnell said ministers should analyse Labour plans to offer 25 hours of free childcare to working parents of three and four-year-olds.

She argued that Labour’s plans, which she said would save hard-pressed parents £1,500 a year for each eligible child, paid for through an £800 million hike in the bank levy, would better achieve the twin goals of giving parents support and helping them back into work.

The shadow minister told the Commons: “We know it will be worth £1,500 per child, we know that the funding will go directly to childcare providers and therefore will not leave parents so exposed to inflated childcare prices.

“We know it’s simple and straightforward to administer and implement for both parents and for Government and we know how it will be funded – through an increase in the bank levy that we have seen has returned so little to the Government compared to how much they initially set out to achieve with it.”

Speaking against the amendment, which the Government defeated 274 to 206, majority 68, Ms Patel said: “The overall system of childcare support remains focused on those on lower incomes.

“The Government is already spending over £1 billion a year on childcare support through tax credits and we will be extending this support under universal credit.”