Free childcare allowance to rise to a maximum of £2,000
Free childcare allowance to rise to a maximum of £2,000
(about 1 hour later)
As many as 1.9 million working families could benefit from a tax-free childcare allowance worth up to £2,000 per child from 2015-6, ministers are to announce.
As many as 1.9 million working families could benefit from a tax-free childcare allowance worth up to £2,000 per child, the government has announced.
The new scheme, first outlined last year, will be brought in sooner and the maximum parents will be able to claim is to rise by £800.
The online scheme, affecting children up to the age of 12, will come in from September next year.
David Cameron will say the move, coming ahead of Wednesday's Budget, will help ease families' financial worries.
Deputy Prime Minister Nick Clegg said the change, announced ahead of Wednesday's Budget, would help families and be "really simple" to join.
But Labour said the assistance was a case of "too little, too late".
But Labour said the assistance would be "too little, too late".
The parties are making rival offers to help families deal with the spiralling cost of childcare, which the opposition says has risen by 30% since 2010.
The parties are making rival offers to help families deal with the cost of childcare, which the opposition says has risen by 30% since 2010.
According to the Family and Childcare Trust, the average nursery cost for a child under two rose by 4.2% last year to £106.38 per week for a part-time place (25 hours) while a full-time place costs £11,000 for a year.
The Family Childcare Trust says the average weekly cost for 25 hours of care for a child under the age of two is £109.89.
At the moment, employees of participating companies can reduce their childcare costs through a tax-free voucher scheme, although only about 5% of UK employers and 450,000 families are signed up to it.
At the moment, employees of participating companies can reduce their childcare costs through a tax-free voucher scheme. But only about 5% of UK employers and 450,000 families are signed up to it.
Ministers say twice as many parents will be eligible for support - including the self-employed - under their new initiative, which will come into force after the 2015 general election.
Ministers say the new scheme - which will come into force after the 2015 general election - will mean twice as many parents are eligible for support, including the self-employed.
When it was originally announced a year ago, ministers said the maximum support available would be £1,200 per child and that it would be open to families where both parents work and earn less than £150,000 a year.
When it was originally announced a year ago, the government said the maximum support available would be £1,200 per child and that it would be open to families where both parents work and earn less than £150,000 a year.
It also said the scheme would be phased in over seven years, with only children under five eligible for assistance with costs in the first year.
It also said the scheme would be phased in over seven years.
Following a public consultation, ministers have agreed to significantly increase the value of the scheme, up to a maximum of £2,000 per child, and accelerate its implementation, extending it to all children under the age of 12 within the first year.
Following a public consultation, ministers have agreed to increase the value of the scheme to a maximum of £2,000 per child, and accelerate its implementation, extending it to all under-12s within the first year.
Parents will be able to get a 20% rebate, per child, on the annual cost of childcare of up to £10,000 a year. For instance, if their annual childcare bill is £6,000, they would be entitled to £1,200 of tax-free support.
Parents will have to set up an online account, allowing them to get a 20% rebate, per child, on the annual cost of childcare of up to £10,000 a year.
In addition, anyone working part-time and earning more than £50 a week, parents on maternity, paternity and adoption leave and those starting their own business but below the earnings threshold will be entitled to support in the first year.
For instance, if their annual childcare bill is £6,000, they would be entitled to £1,200 of tax-free support.
The prime minister will say the scheme is an important component of the government's long-term plan for the economy, and will "help millions of hard-pressed families with their childcare costs and provide financial security for the future".
In addition, anyone working part-time and earning more than £50 a week, parents on maternity, paternity and adoption leave and those starting their own business will be entitled to support in the first year.
The government is also announcing a £50m cash boost for early years education, aimed at helping three and four year olds from the most disadvantaged backgrounds.
Deputy Prime Minister Nick Clegg told BBC Radio 4's Today programme that introducing different income cut-off points - rather than an earnings ceiling of £150,000 per parent - would have made it too complicated.
The money will be available to nurseries, schools and other providers of free education in England to improve their overall provision, including recruiting staff and supporting specialist speech and language services.
"This is really simple." Mr Clegg said, adding: "For every 80p you pay, the government will pay 20p. It's as simple as that."
In addition, the government will also pledge to meet 85% - up from 70% - of the childcare costs of 300,000 families moving onto the universal credit benefit scheme, which will see six in-work and out-of-work benefits consolidated into a single monthly payment by 2017.
Under the government's proposals, the current Employer Supported Childcare scheme will continue but will not be open to new members from August 2015. Existing participants will be able to transfer to the new scheme but will not be able to take advantage of both.
Deputy Prime Minister Nick Clegg said the package of measures would help ensure "everyone can get on and succeed".
The Conservatives, Liberal Democrats and Labour are all seeking to promote family-friendly policies in the run-up to next year's election.
He told BBC Radio 4's Today programme the scheme would be easily implemented and simple to access.
The government has increased the entitlement for three- and four-year-olds to free early years schooling from 12.5 to 15 hours a week while Labour has said this will go up to 25 hours if it wins power after 2015.
"It's a very big but very fair package, which targets resources at those who need it most," Mr Clegg said.
Labour warned that parents were likely to be paying more of their disposable income towards childcare in 2018 than they are now as a result of the government's policies.
The deputy prime minister defended the fact that families at the very top end of the threshold - in which both parents earn up to £150,000 - will avail of the same benefits as those on low incomes.
He said the coalition wanted to make the system as "simple as possible" and that introducing different income cut-off points would have made it too complicated.
"This is really simple. It's basically administered by HMRC. You create an online account," Mr Clegg said.
"For every 80p you pay, the government will pay 20p. It's as simple as that."
Under the government's proposals, the Employer Supported Childcare scheme will continue but will not be open to new members from August 2015. Existing participants will be able to transfer to the new scheme but will not be able to take advantage of both.
The Conservatives, Lib Dems and Labour are all seeking to promote family-friendly policies in the run-up to next year's election.
The government has increased the entitlement for three and four year olds to free early years schooling from 12.5 to 15 hours a week while Labour has said this will go up to 25 hours if it wins power after 2015.
Labour warned that parents are likely to be paying more of their disposable income towards childcare in 2018 than they are now as a result of the government's policies.
"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," said shadow children's minister Lucy Powell.
"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," said shadow children's minister Lucy Powell.
"David Cameron has cut support for children and families by £15bn since he came to office, And today he confirms that no help will arrive until after the election. This is too little, too late."
"[Prime Minister] David Cameron has cut support for children and families by £15bn since he came to office, And today he confirms that no help will arrive until after the election. This is too little, too late."
