Social care

The Coalition government risks repeating the mistakes of the previous Labour government by focusing too much on tax and benefit incentives as the only solution to poverty, argues a budget briefing from the Joseph Rowntree Foundation, What will Budget 2012 Mean for UK Poverty? The briefing also argues that while, taken in isolation, the impact of the Coalition government’s aim to raise the tax threshold to £10,000 could help those on low incomes, it must be seen in the context of overall tax and benefit changes.

The briefing notes that for families with children the raising of the income tax threshold by £1,000 in April 2011 more than outweighed the gains created by freezing child benefit, reducing tax credits and reducing child care reimbursement.

The briefing draws on evidence from the organisation’s previous research to show how potential policy decisions in the Budget would affect poor places and people in the UK.

Figures compiled by the Daycare Trust for the annual Child Care Costs Survey, 2012, show that 44,000 fewer families will be getting help with childcare costs following the April tax credit cut. The survey also finds that nursery costs will rise by nearly 6 per cent, and that there are major gaps in childcare despite legal duties on local authorities. By cutting the maximum level of support available through the childcare element of Working Tax Credit from 80 per cent of costs to 70 per cent, the average claim has fallen by over £10 per week, costing the low-income working families that receive it more than £500 per year.

The survey, which is sponsored by Computershare Voucher Services Ltd, finds that average childcare costs now exceed £100 for a part-time place (25 hours) in many parts of Britain with the average yearly expenditure for a child under two standing at £5,103.

Tax revenue generated by working mothers would far outstrip the cost of free nursery places for all argues the Institute for Public Policy Research (IPPR) in its latest report, Making the Case for Universal Childcare.

At just over 60 per cent, the employment rate of women with children in the UK is much lower than in many other OECD countries. It ranks 19th behind countries such as Iceland, Sweden and Denmark, which tend to have affordable, high-quality childcare provision. Many women in the UK, especially those on low to middle incomes, stop work after having children because of the high cost of childcare. In the UK a couple who are both earning average wages spend  27 per cent of their income on childcare while the average for the 34 developed nations of the OECD is 12 per cent.

Households with low to middle incomes (LMI) are more dependent on female employment and on the benefit and tax credit system than in the past, finds the Institute for Fiscal Studies (IFS) in Why did Britain’s households get richer? The IFS analysis, conducted for the Resolution Foundation, found that among low- to middle-income households: