Childcare and Universal Credit
9 November 2011
Parliamentary Briefing – Welfare Reform Bill
Second Reading, House of Lords
13 September 2011
Introduction
Childcare and Universal Credit (
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- We support the Government’s aspiration to reform and simplify the social security system to make work pay and for it always to be seen to pay. From our work with families, we know that providing financial help with childcare costs is vital to make moving into and progressing in employment a realistic option for working parents. We believe that the success of the Universal Credit in this regard will depend on the level of childcare support available. We have been working closely with DWP Ministers and officials to input into the design of a system of childcare support within Universal Credit, and we maintain that this must be a system that works for all parents.
- Childcare costs are high and rising – Daycare Trust’s Childcare Costs Survey 2011 found that a part-time (25 hours) nursery place for a child aged two and over is £94 per week in England. This has risen 4.8 per cent since 2010. In London the cost is £113 per week. Analysis by the OECD shows that Britain has some of the most expensive childcare in the world and that this causes significant disincentives to work for parents on low and middle incomes (OECD, Doing Better By Families, 2011). A recent survey by Daycare Trust and Save the Children found that among families in severe poverty nearly half had cuts back on food to afford childcare and 58 per cent said they were or would be no better off working once childcare is paid for.
- We welcome the Government’s proposal to extend childcare support to parents working fewer than 16 hours per week. This group cannot currently receive the childcare element of Working Tax Credit, which has reduced incentives for parents to move into work for a few hours per week. However we do not believe that this change should be made at the expense of those working more than 16 hours, as this will reduce incentives to progress in the labour market, and effectively end the prospect of full-time work for some low-income families.
- In order to ensure that work pays, we are calling on the Government to increase the budget available for childcare in order to provide a childcare element within the Universal Credit covering up to 80% of childcare costs, up to maximum eligible costs of £175 for one child or £300 for two or more children. This assistance should be available to all working parents. Rather than being seen as a cost to the benefit system, childcare support should be seen as an essential investment in supporting parents to work. In the long run it will lead to a reduction in spending on out-of-work benefits and higher levels of employment among parents, and should also result in higher income tax and National Insurance returns to the Exchequer. Investing in the early years also has the benefit of supporting child development (as acknowledged in the recent reports by Frank Field MP and Graham Allen MP) and reducing the inequalities which are already present when children start school.
Briefing supported by:
4Children, Barnardo’s, Child Poverty Action Group, Citizens Advice, Daycare Trust, Early Education, Every Disabled Child Matters, Family Action, Fawcett Society, Gingerbread, National Day Nurseries Association, Oxfam, Platform 51,Pre-school Learning Alliance, Resolution Foundation, Save the Children, TAMBA (Twins and Multiple Births Association),The Children’s Society, TUC, Working Families, Zacchaeus 2000 Trust (Z2K)
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