Working families spared further childcare cuts

Resolution Foundation’s calls for a rethink on childcare deliver success as the Government announces childcare support under the new Universal credit will be kept at current levels, compensating low to middle income working parents for 70% of their childcare costs. This is good news for working parents who had previously been threatened with a further cut in support. Additional funding for parents working fewer than 16 hours will now help more get into – and stay in – work.

Working parents are however still reeling from the £300millon cut in funding to childcare that already took place this April – reducing support from the previous level of 80% of costs to 70% of costs, losing around half a million working parents an average of £450 and reducing the incentive to work. The £300m announced today to support childcare costs for those working less than 16 hours appears to simply be a recycling of the same amount cut last April.

The coalition have been under pressure to listen to the growing concerns of working parents, especially women, as highlighted in the recent poll by Ipsos Mori for the Resolution Foundation, which showed a 7 % point drop in support for the Conservatives among female C2 voters since the election and a 14% point drop for the Liberal Democrats.

Vidhya Alakeson, Director of Research at the Resolution Foundation said:  ‘The good news is that more parents working part time will be eligible for support and others already receiving it won’t face further cuts. The bad news is the misguided cuts made back in April – which lost half a million working parents around £450 each – haven’t been reversed.’

‘£300m was cut from the childcare Budget back in April – which is the same amount the Government has now found to support childcare costs for those working fewer hours – they look like they are taking with one hand and giving with the other’.

Notes to editors

Childcare funding though working tax credits was cut in the 2010 spending review by £335million in 2011/12, £350million in 2012/13 and £370million in 13/14 (updated figures taken from Budget 2011). 470,000 working parents claiming working tax credits lost on average £436, with some losing up to £1,300.

Work commissioned by the Resolution Foundation showed that under the Government’s previous proposals for further cuts in support for childcare under Universal Credit, a second earner in a couple with two children on the living wage of £7.20 an hour would keep only 9p of every pound earned over 20 hours a week, and take home no extra cash at all from working beyond 30 hours a week, The Hours Trap, Donald Hirsch

Polling by Ipsos Mori for the Resolution foundation compares voting at the 2010 election with voting intentions during the first half of 2011. Among female C2 voters it showed a 7% point drop in support for the Conservatives, a 14% point drop for the Liberal Democrats and a 17% point increase in support for Labour.