9 Sep 2012

One hundred thousand of the country’s poorest working families(1) will be hit hardest when new childcare measures come into effect under the new benefit system, Universal Credit, our new report reveals today.

The findings are released as MPs scrutinise the government’s plans  for implementing Universal Credit(2), which aims to improve incentives for parents to be able to work and move out of poverty.

The move could see these families lose up to £4000 a year in childcare. Money that is crucial to families that are typically the lowest paid(3) and are already struggling to provide the basics like food and clothing.

On average, our report ‘The Parent Trap: Childcare cuts under Universal Credit’ estimates these families will lose £23 a week from help with childcare costs. This will leave them having to pay up to seven and a half times more than they do under the current system.  

Cutting support jeopardises our children's chances

Our Chief Executive, Matthew Reed, said: 'Poverty is the harsh reality for hundreds of thousands of families across the UK and childcare is key to making it possible for parents to stay in work. The government is right to focus on work as a route out of poverty. But by cutting vital support, it is jeopardising our children’s chances of a better life.'

We are calling for Universal Credit to cover 80% of low-income families’ childcare costs rather than the planned 70%. This would help make sure that the core principle of making work pay under Universal Credit is met.

The Parent Trap reveals that crucial support in addition to what these families receive under the tax credit system, which covers up to 26% of childcare costs through Housing Benefit and potentially Council Tax Benefit, will be lost under the new system(4). 

Ends

Media enquiries

For more information, please call Beth Herzfeld, Senior Media Officer in The Children’s Society media team on 020 7841 4422/ 07775 812 357 or email beth.herzfeld@childrenssociety.org.uk. For out-of-hours enquiries please call 07810 796 508. 

Notes to editors

  • Use our map and calculator to see the effects of families affected by the changes to their benefits.
  • The Children’s Society wants to create a society where children and young people are valued, respected and happy. We are committed to helping vulnerable and disadvantaged young people, including children in care and young runaways. We give a voice to disabled children, help young refugees to rebuild their lives and provide relief for young carers. Through our campaigns and research, we seek to influence policy and perceptions so that young people have a better chance in life.

Footnotes

(1.) Of households receiving childcare tax credits, 18% of those in the South of England (32,000 households) are affected, compared to 13% in the Midlands and East of England (22,000), 12% in the North of England (26,000), 7% in Wales (2,000) and Northern Ireland (4,000) and 13% in Scotland (14,000). (Return to text.)

(2.) Dr Sam Royston, The Children’s Society’s Poverty and Early Years Adviser, will give evidence in today’s session of the Department of Work and Pensions’ Select Committee Inquiry into progress towards implementation of Universal Credit. (Return to text.)

(3.) According to government statistics, most children living in poverty in the UK (58%) are in low-paid working families. Our report, The Parent Trap: Childcare cuts under Universal Credit, reveals 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 that are not living in poverty. (Return to text.)

(4.) Many low-income working families can get up to 96% of their childcare costs covered through a ‘disregard’ of childcare costs, with 70% provided under Working Tax Credit (as will be provided under Universal Credit) and a crucial 26% through Housing Benefit and potentially Council Tax Benefit, that will be lost under the changes as currently planned. (Return to text.)