The proposal for child care vouchers

The government is set to propose ‘child care vouchers‘ as an alternative to the current system of support for child care in Tax Credits.  The details are still vague, but what’s being reported is that:

  • parents will receive 20% of child care costs, up to £1200 per child for £6000 costs;
  • both parents must be working, earning more than the tax threshold, and not in receipt of Tax Credits or Universal Credit;
  • people on universal credit will continue to get up to 70% of child care costs.

It’s difficult to work out just what this means, but I think the implication is that payments will still be personalised and that receipts will be demanded; that people will have to choose between this scheme and  UC; and that because it pays much less than UC, the main beneficiaries of this initiative will be  people on higher incomes.    I’m not sure whether the reference to ‘both parents’ means what it says, because there are many single parents whose entitlement should not be affected by the status of an ex partner.

The support currently given for child care is a bit of a mess.  The effect of relying on Tax Credits – means-testing people for costs incurred in a private market – has been, predictably, a  mismatch between financial support, costs and need.  (It’s the same problem  that afflicts housing benefits, where the approach can feed increased charges made by providers,  and there are inequities in distribution because more support goes to people who can initially afford to incur higher liabilities. )   While there are 4.1 million families receiving Tax Credits, only 430,000 receive the child care element – the statistics are here.   The average payment for that minority of families is £59 per week, which is large enough to make a significant difference to their lives, and within those figures 75,000 families receive more than £150 per week.  That number has been slowly increasing, and it’s going to increase further – it always happens with selective, market-oriented benefits, because the boundaries can’t be held to.    In principle, the money could be used better, but current expenditure, even with the proposed injection for better-off families, is  far short of what the country would need to provide an adequate system of child care.

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