UK announces childcare tax break worth €2,300 per child

Britain’s coalition government today unveiled childcare tax break for working parents which will be more generous than expected and expanded to older children more quickly

The joint announcement by British prime minister David Cameron and his deputy prime Minister Nick Clegg, comes on eve of Britain's annual budget statement which will set the tone for a 2015 election campaign.

The new scheme — due to come into force from the autumn of 2015 — will be worth up to £2,000 per child (€2,300), compared with the £1,200 originally proposed. And it will apply to all children under 12 within its first year of operation rather than the seven-year programme envisaged when it was first announced by British chancellor George Osborne a year ago.

Around 1.9 million families could benefit, twice as many as under the present voucher scheme which is only available where adopted by an employer.

But the policy has faced criticism for excluding couples where one parent does not work and being available to high-earning households with a joint income of up to £300,000.

In a bid to counter criticism of a boost to better-off families, there will be a £50 million boost for nurseries looking after the most deprived three and four-year-olds. And in what children’s charity Barnardo’s hailed as a “double victory” for the poorest families, it was confirmed that families claiming Universal Credit will have 85 per cent of childcare costs met, up from 70 per cent.

Fiscal policy is expected to be key battleground in the run-up to the election that looks set to be a tight battle with Labour currently slightly ahead in opinion polls.

“Tax free childcare is an important part of our long-term economic plan,” said Mr Cameron. “It will help millions of hard-pressed families with their childcare costs and provide financial security for the future.”

The opposition Labour party welcomed steps to help parents, but said the government action was “too little, too late”.

Consultancy KPMG said the scheme could free up more workers and ultimately benefit the economy.

The budget, to be delivered by Conservative finance minister George Osborne tomorrow, is expected to give a sober analysis of the challenge that Britain still faces to get its finances and debt levels under control.

The latest YouGov survey has Labour with 40 percent support, the Conservatives with 32 percent, the anti-European Union UK Independence Party (UKIP) with 11 per cent, and the Liberal Democrats with 9 per cent.

PA/Reuters