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Childcare reforms 'give with one hand but take with the other'

29 November 2013

Citizens Advice Chief Executive, Gillian Guy, has welcomed news that Government plans to allow parents to share childcare leave, but warns that due to inconsistencies between a number of new measures, like Universal Credit and the higher income tax threshold, many low income families will find childcare "a heavier burden to bear".

Under Universal Credit, changes to childcare support will mean some parents actually see their net income drop. The amount of support parents will receive towards childcare drops from 85% to 70% as they are taken out of paying tax by the rising threshold.

Gillian Guy said:

"For too long the automatic assumption that women will take time off work to raise the child meant many had to choose between being a parent or pursuing a career. It is welcome that Government is making it easier for mothers and fathers to decide for themselves who is best placed to look after their children.

"Ministers' various reforms to childcare give with one hand but take with the other. Plans to allow parents to share childcare leave are welcome but many of those same families will actually lose support under Universal Credit.

"Some families stand to lose up to 25% of the money they currently receive to help meet childcare costs. Despite today's news, Universal Credit will make it harder for many new parents on low incomes will find it harder to return to work after the birth of their child. The lower rate of support under Universal will mean that for some, it is impossible to make extra hours of work pay due to the increased cost of childcare.

"Ministers will be concerned that their flagship policy of raising the income tax threshold could actually make some low income families worse off.  Some parents could find themselves in a situation where one minute they get the good news of no longer paying income tax but are suddenly hit with the daunting prospect of paying an extra 15% of their childcare costs. Ministers must clear up this confusion and ensure their reforms don't end up making childcare a heavier burden to bear."


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Notes to editors:

  1. The Citizens Advice service comprises a network of local bureaux, all of which are independent charities, the Citizens Advice consumer service and national charity Citizens Advice. Together we help people resolve their money, legal and other problems by providing information and advice and by influencing policymakers. For more see the Citizens Advice website.
  2. The advice provided by the Citizens Advice service is free, independent, confidential, and impartial, and available to everyone regardless of race, gender, disability, sexual orientation, religion, age or nationality.
  3. To find your local bureau in England and Wales, visit citizensadvice.org.uk. You can also get advice online at adviceguide.org.uk
  4. You can get consumer advice from the Citizens Advice consumer service on 03454 04 05 06 or 03454 04 05 05 for Welsh language speakers
  5. Citizens Advice Bureaux in England and Wales advised 2.3 million clients on 5.4 million problems from October 2013 to September 2014. For full 2013/2014  service statistics see our quarterly publication Advice trends
  6. Citizens Advice service staff are supported by more than 21,000 trained volunteers, working at over 3,000 service outlets across England and Wales.