Could childcare cuts be the Coalition’s 10p tax?

The Times urges the Coalition to reconsider the proposed cuts of £1500 for the low income families' childcare costs. The Government would be wise to heed their advice.

The Times’ leader article (£) today urges the Coalition to reconsider the proposed cuts to childcare allowances for low income families. The Government would be wise to heed their advice.

In October, George Osborne used the Spending Review to announce that:

“we will return the childcare element of the Working Tax Credit to its previous 70% level.”

This technocratic sentence means that from April 6th close to half a million families earning less than £30,000 per year will lose up to £1560 per year in tax credits. At present, families can claim 80% of the cost of childcare up to £300 for couples with two or more children and £175 for single parent families. The cut to 70%, which saves £385m by 2013-14, means that many families will lose £30 per week.

The Times are rightly concerned that it will encourage parents to cut back on their hours to take on the childcare themselves rather than making up the difference:

“The Office for Budget Responsibility has already questioned the logic of this move since the Treasury had based its savings calculations on the assumption that no mother would give up work as a result, something that is highly unlikely.”

Gordon Brown’s decision to scrap the 10p tax caused a huge rebellion because the regressive move was seen as fundamentally at odds with Labour’s values even though the original decision cost low-income families the small-by-comparison sum of £232 per year.

The childcare cuts are damaging for the Tories, in particular, since they have claimed to be the party of the family while Iain Duncan Smith has stressed the importance of work. Families are already facing squeezed budgets from rising prices including fuel prices, falling real incomes, and the more publicised cuts to public services and tax credits. This little talked about cut could come back to bite them more than most.

16 Responses to “Could childcare cuts be the Coalition’s 10p tax?”

  1. Tim

    RT @leftfootfwd: Could childcare cuts be the Coalition's 10p tax? http://bit.ly/fYJLpZ

  2. Sabby Dhalu

    RT @leftfootfwd: Could childcare cuts be the Coalition's 10p tax? http://bit.ly/fYJLpZ

  3. Kelvin John Edge

    RT @leftfootfwd: Could childcare cuts be the Coalition's 10p tax? http://bit.ly/fYJLpZ

  4. Abigail Scott Paul

    RT @leftfootfwd Could childcare cuts be the Coalition's 10p tax?http://bit.ly/fYJLpZ -> affordable childcare essential for working families

  5. Chris Goulden

    RT @leftfootfwd Could childcare cuts be the Coalition's 10p tax? http://bit.ly/fYJLpZ

  6. Lucas

    Another brilliant example of the coalition’s ‘joined up’ thinking?

  7. Mark Mills

    Good analysis of why cutting gvt support for childcare is a false economy http://bit.ly/fYJLpZ

  8. Hens4Freedom

    RT @leftfootfwd: Could childcare cuts be the Coalition's 10p tax? http://bit.ly/fYJLpZ

  9. Paul Brook

    RT @AbigailSPaul: RT @leftfootfwd Could childcare cuts be the Coalition's 10p tax?http://bit.ly/fYJLpZ -> affordable childcare essent …

  10. John Lenin

    Further proof that this government is more ideological than Thatcher’s and more incompetent that Major’s. Disastrous.

  11. Will Straw

    Osborne wld be wise to heed The Times' advice & think again on childcare cuts which cld be the coalition's 10p tax http://bit.ly/fYJLpZ

  12. Ash

    I don’t really see why this should be the straw that breaks the camel’s back. The Tories have been requiring families with children to bear the brunt of cuts from the word go, with cuts to the Child Trust Fund, EMA, the schools building program, Sure Start etc. Even when they decided to squeeze £2 billion out of higher earners, it was only higher earners with dependent children they went after (via the Child Benefit cut). God forbid that wealthy childless yuppies or empty-nesters should suffer.

    But yes, hopefully this will help wake people up to the fact that the rhetoric about ‘intergenerational fairness’ and ‘not making our children pay for our mistakes’ is utter, utter bollocks. Making our children pay for our mistakes is precisely what this government is doing.

  13. Teadrinking Mom

    This cut will definitely come back to bite them – remember when the Labour government tried to introduce a more progressive childcare system by shifting funds out of employer supported vouchers and putting them toward 2 year old places – in the end they had to back down after a near mutiny from their own female backbenchers.

    The thing that amazes me though is that no-one is putting this together with the promised Review of the Code of Practice on free childcare places for 3 and 4 year olds, which seems very likely to allow the introduction of top-up fees. This would mean that in many nurseries the so called 15 hours a week of free places become conditional on the purchasing of hours. Its a practice that goes on already but allowing it formally would be the death knell to the free universal childcare offer.

    Why is no-one writing about this??!!

  14. Anon E Mouse

    John Lennin – More incompetent than Major’s? What planet are you on?

    With 10p Tax, openly lying to take the country to war in Iraq to support a US president called George Bush, National Insurance discs missing, Jackie Smith – (the Home Secretary’s husband spending OUR money or his porno addiction), Damian McBride smearing people from Downing Street (including David Miliband and Alistair Darling), promising Tony Blair to get a Full Third Term then backtracking, not supplying enough support to our troops, deregulating the banks then knighting the idiots that ran them, sucking up to Gadaffi and allowing Scotland to release Britain’s biggest terrorist, Tony Blair and his big business oil links to Saudi Arabia, taking Labour funding from scoundrels, the F1 boss dictating policy over cigarette advertising, opening our boarders to mass immigration, claiming otherwise yet calling anyone who questioned it a racist, calling for “British Jobs For British Workers” – illegal under EU law, allowing terrorist hijackers from Afghanistan to have free housing here yet leaving ex serviceman homeless, selling our gold at a historic low and claiming to have ended the economic cycle, arresting an 86 year old lifelong Labour supporter under the Terrorism Act, introducing tuition fees and trying with ID Cards and 90 Day Detention without even being told the charges, claiming to care about global warming whilst approving a new runway at Heathrow…. phew.

    My fingers are hurting John Lenin but if you need more examples of Labour incompetence and hypocrisy just try to defend any of that lot.

    Your response is the reason life long Labour supporters like myself have left the party and moved elsewhere. This country needs a New New Labour and until that point is realised get used to opposition…

  15. Carolyn Anderson

    Could childcare cuts be the Coalition's 10p tax? | Left Foot Forward http://goo.gl/jRgp5

  16. Two cheers for the Social Mobility Strategy | Inequalities

    […] but this is through various tricks of accounting; in practice, many will close – or the cuts in childcare allowances for low-income families. They are also ‘moving away from a narrow focus on income measures’, […]

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