Justin Tomlinson MP has welcomed a major new childcare package unveiled by the Prime Minister today which will help 310,000 families in the South-West.
The Government’s new Tax-Free Childcare scheme will provide 20 per cent support on childcare costs up to £10,000 per year for each child via a new simple online system. The limit had previously been set at £6,000. This now means support of up to £2,000 per child per year.
In addition, to help more families move off benefits and into employment, the Government also announced that it will cover the 85 per cent of childcare costs for around 300,000 families receiving Universal Credit, making sure work always pays.
Justin said: “For too long it has been too difficult for many families to find good, affordable childcare.
“This announcement is great news for children and families in Swindon. As part of our long-term economic plan, these measures will help parents provide more financial security for their families, while directing extra support to those children from disadvantaged backgrounds.”
· The scheme will open in autumn 2015 and be available to around 1.9 million working families with children under 12 by the end of its first year of operation. The government’s consultation had originally proposed that eligibility for the scheme would build up more gradually and that it would take seven years for all children under 12 to be eligible to receive support.
· New online Tax-Free Childcare accounts will be run by HM Revenue & Customs (HMRC), in partnership with National Savings & Investments (NS&I). The accounts will make it easier for parents and providers, involve no fees and give parents security over their money, allowing them to build up credit for use when they need it most, for example during school holidays.
· The scheme will also benefit childcare providers, who will be able to receive each child’s payment from a single account under Tax-Free Childcare, rather than keep track of multiple payments relating to a single child from different bank and voucher accounts.
· For the first time, self-employed parents and those working for the vast majority of employers who do not offer the existing ESC scheme will be able to access the scheme. It will also be available to those working part time due to the low minimum earning threshold of £50 per week.
· The rules will also be tailored to support entrepreneurs and those self-employed who do not at first meet the minimum earnings requirement to be eligible for the scheme in their first year.
· All working families where the parents earn at least £50 per week will have access to government support with childcare costs, unless one of the parents earns over £150,000 or receives support from tax credits, Universal Credit or ESC.
· Parents currently receiving childcare vouchers through ESC can continue to benefit from the scheme with their current employer should they wish to do so, but it will be closed to new entrants from autumn 2015. Workplace nurseries will be unaffected.
· The changes follow the government’s consultation with parents, childcare providers, employers and other interested groups on the scheme’s implementation, the response to which has been published today.
· Helping families move off benefits and into work is an important priority for the Government and is central to Universal Credit, to help ensure it always pays to work.
· Last year we consulted on a proposal to increase the rate of childcare support under Universal Credit for taxpayers. Today, the Government announces that all families in Universal Credit will be able to receive 85% support on childcare costs, up from 70%.
· This change will see 300,000 working families getting more out of the money they earn. More and more families will find that it pays to get a job, from taking the first few shifts back at work, right up to working full-time.
· In line with the principles of the welfare cap, offsetting savings to fund this expansion will be found from within the Universal Credit programme. Further details will be set out at Autumn Statement.