Childcare cuts will hit poorest families

100,000 of the poorest working families will be hit hardest by arrangements for childcare costs under the new universal credit, a leading charity has warned. Under universal credit, due to be introduced from 2013 onwards, families will lose the contribution to childcare costs currently available through housing benefit and (potentially) council tax benefit. As a result, help with childcare costs will be limited to 70 per cent instead of up to 96 per cent now.

Key points

  • Working families living in poverty are about four times more likely to be affected by this change than those receiving help with childcare costs through tax credits who are not living in poverty.
  • These families – around 100,000 in total – will face a cut of up to £2,320 a year from their childcare support if they have one child, or £3,980 a year if they have two or more children. This will leave them having to pay as much as seven times more than they do under the existing system.
  • Low-income working families in areas where housing costs are high, such as in London and the south of England, are likely to be affected disproportionately.
  • The report calls for universal credit to cover 80 per cent of low-income families' childcare costs rather than the planned 70 per cent.

Source: The Parent Trap: Childcare Cuts under Universal Credit, Children's Society
Links: Report | Childrens Society press release