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7th January 2013

Child care is about to take centre stage as both David Cameron and Nick Clegg seek to reinvigorate the Coalition for the second half of its term in office.

The move comes just as the Government has incurred the wrath of many better off families by cutting or axing their child benefit. But helping those earning between £20,000 and £40,000 with a child care tax credit of as much as £2,000 per child under five should prove to be much more popular.

Details are scant at the moment, partly because the Government is looking to announce a different policy in detail over the next twelve weeks or so, but it is clear that some newspapers such as the Telegraph have been briefed. That is probably very good politics, but it doesn’t make for easy analysis and of course the devil usually lies in the detail.

Reports say the new credit will not be means-tested, though it may be more accurate to say it will be a fixed amount that won’t vary depending on income. If it is only available to certain income groups then it might be more accurately described as a hybrid rather than a means-tested or a universal credit. That will certainly be the case if the better off are not eligible for it. Maybe better off families will have another reason to be cross.

The reports suggest that the tax break will replace the current system of means-tested childcare vouchers, free entitlements and childcare tax credits. It certainly sounds simpler but it the policy involves merging three other benefits and credits, then it is certain to create losers as well as winners even if it does prove more generous on average.

It also comes at time when changes to other tax credits and benefits are proving hugely controversial with many due to be capped at one per cent.  

Just this morning Labour (7th January) claimed that 4.6 million women would be adversely affected by other Government changes to the tax credit system using figures compiled by the House of Commons Library and reported in the the Guardian.

It may be a while before parents in the middle income brackets can assess whether they are the winners or losers from all these changes. We promise to keep you informed.

 

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