Childcare tax breaks planned

Chancellor George Osborne said the Government is looking at tax breaks which would offer a tax break for money spent on childcare by working families.

According to a Government consultation, the scheme would be run through online voucher accounts, with tax-free childcare worth up to £1,200 per child, per year.

In autumn 2015, children born in or after September 2010 would be eligible in families where all parents are in work, with each earning less than £150,000 per year.

Read: Kids vouchers for parents

Katie O'Donovan from parenting website Mumsnet has welcomed the proposed childcare voucher scheme but questions if those most in need will get the help needed.

She said: "Mumsnet users have been calling for help with the ever-rising cost of childcare, which is a serious impediment to many mothers returning to work after children, for some time, so we welcome the additional funding going into this scheme.

"However there is concern that single-parent households might lose out whilst some very high earning two-parent households will benefit.

"A couple could earn £300,000 a year and still benefit. That doesn't seem sensible and is inconsistent with other cuts, such as those to child benefit and to childcare tax credit.

Neil Leitch, chief executive of the Pre-School Learning Alliance, which represents childcare providers, said the Government's planned voucher scheme was unfair to stay-at-home mums.

He said: "This tax break does nothing to support those who choose to sacrifice their salary and put their careers on hold to stay at home and look after their young children...

"We would prefer the Government to properly fund universal childcare provision for all families, regardless of income. Instead, this seems to be more about dangling a £1,200 carrot to tempt mums back to work rather than providing real childcare choices."

Chancellor George Osborne says the Government wants to give working parents better access to quality and affordable childcare, with its childcare voucher plans.

"This Government is on the side of people who want to work hard and get on in life. Tax-free Childcare will help working parents by giving them more choice and better access to the quality, affordable childcare they need.

"We want to make the new scheme work in the way that is best for parents, so today we are asking for their views, and I'd like as many parents as possible to tell us what they think."

The Government has launched a consultation on plans to offer tax-free childcare vouchers to working parents from 2015. The plans include:

• A £1,200 limit per child each year
• Both parents would have to be working, each earning below £150,000 a year
• The Government says 2.5 million families would benefit from the scheme

Parents who do not work because they are carers will be eligible to claim childcare support worth up to £1,200 a year for each son or daughter under the plans.

And the scheme - announced in Chancellor George Osborne's Budget in March - will also be extended to those who are off work during maternity or paternity leave.

Labour's shadow minister for children and families, Sharon Hodgson, has hit out at the government's plans to help working parents with childcare, branding them "out of touch".

The Labour MP told ITV News that families need help now and not in two years time.

"David Cameron is quite keen to help millionaires with a tax cut, but not mums," she said.

A think tank has warned that the government's plans for increased tax breaks for two-earner families will not help the poorest households

Resolution Foundation, a think tank that conducts research into how to improve living standards for those living on low and middle incomes, said the government needs to adapt the scheme to help the poorest working families.

"Our analysis shows that only a tiny fraction of the new money will benefit the lowest-income working families. Just 160,000 families in the bottom 40% of the income distribution will qualify for extra help, compared to 1.7 million in the top 40% by income.

"Within universal credit, support will only go to higher income households. More than 900,000 working families with children who will receive universal credit will be excluded from extra childcare support because they do not earn enough to pay income tax.

"These are families where at least one parent is in low-paid, part-time work.

It's crucial that, following this consultation, the Government adapts its scheme to help the poorest working families - the very people who find high childcare costs the biggest barrier to work."

Think tank the IPPR, whose research has revealed that women are increasingly taking on the role of main earner in families across the country, has called for the government to make it easier for women to go back to work, after they have children. Associate director Dalia Ben-Galim said:

Scotland has the highest number of female breadwinners, new research has revealed, whilst London and the South East has the lowest.

• 32% of females are the breadwinners for their families in Scotland
• In Wales and the North of England the number stands at 31%
• In London and the South East the number reduces to 27%
• In East of England, 26% of women are the main earners for their family

Researchers from think tank IPPR said the increasingly rate of female breadwinners in Scotland and the North of England coincides with the decline of manufacturing industry and the higher rate of unemployment for men.