Government announces more money to help with childcare

Low-income working parents will be eligible for childcare support from 2013, from an estimated £300m fund

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The Government has announced that it is to extend childcare support to 80,000 more families. Currently parents get credits to cover up to 70% of childcare costs, but in order to claim it, you have to work a minimum of 16 hours a week. The Government has now announced it will be scrapping this rule from 2013 to make it easier for parents to find work.

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“We are determined to help more parents take their first steps into work, but under the current minimum hours rule parents are trapped in state dependency without the childcare support they badly need,” said Iain Duncan Smith, Secretary of the State of Work and Pensions.

So what does the new plan mean for families?

The changes to childcare benefits will save parents up to £300 a week as families will be able to get up to 70% of their childcare costs, even if they’re only working for a few hours a week. Some women wanting to return to work after having a baby are only looking for part time work. The new initiative should provide an average of 40 hours a week in childcare for up to 80,000 families across the UK, according to BBC News.

“[Following these new plans] more women will be able to take steps towards employment and more parents can work part-time, or full-time,” said Iain Duncan Smith to the Guardian.

Iain Duncan Smith explained that the new childcare payments will be made through the universal credit, that will replace tax credits and other benefits in 2013. The payments will be calculated by months rather than weekly to help parents balance their costs all year round, instead of struggling during the long school holidays when they need childcare support more than usual.

The Government estimates that around 2.7 million families will have higher entitlements once the universal credit is put in place. The Government also plans to crack down on families trapped in benefits, introducing stricter rules where people will lose their benefits if they refuse three jobs within three years.

“We all know how difficult it is sometimes to juggle family and work but this is really good news, especially for lone parents and mums up and down the country,” said Deputy Prime Minister Nick Clegg.

What exactly is universal credit?

Universal credit (UC) is what the Government plans to put in place by October 2013 and is a system that will replace child tax credit, housing benefit, income related employment and support allowance, working tax credit and more.

According to the Government, the new UC system aims to:

  • improve work incentives
  • reduce in-work poverty
  • simplify the system
  • cut back on fraud and error

What’s the catch?

The big question is where’s this £300m coming from? Some organisations are concerned that it’s just moving the money around in the same pot – so while families may benefit in one way, they may lose out in others.

“With childcare costs rising, any measures to help parents access good quality childcare are welcome,” said Social Market Foundation Director, Ian Mulheirn, in response to the Government’s announcement.

“But this is not new money that the Government has conjured up. The £300m to fund the extension has been found from elsewhere in the Universal Credit pot, so will take funds away from the same group of people – families on low and middle incomes. Supporting childcare is necessary and makes good politics, but rather than robbing Peter to pay Paul, DWP is essentially robbing Paul to pay Paul.”

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