You are here: News New research estimates that 335,000 families will fall through childcare support gap

Some 335,000 families could miss out on the vital financial help they need to pay for childcare and stay in work, because of the complexity of the new childcare support system, according to new research by the Family and Childcare Trust.

The Government estimated that 50,000 such families may be affected, but their figures did not take into account the growing numbers of people who are self-employed and on zero hours contracts.

From 2016 there will be four main financial support systems for childcare: tax credits, Universal Credit, existing employer-supported vouchers and the new tax free offer.  Some families will also be receiving help with their childcare costs through Job Centre Plus, colleges and through Housing Benefit.

Many families will not know which system will give them the best support. If they opt for the wrong scheme, families could lose vital financial support, and the onus will be on them to know when to switch schemes. While there are plans for an online calculator to guide parents through the new support systems, it will not incorporate those many families who have not yet moved to Universal Credit or who remain on their employer-supported scheme.

The families who will be most affected are the increasing number whose wages fluctuate, such as the self-employed, temporary workers, those who rely on commission and people on zero hours contracts - hard-working families who want to get on and better themselves.

Anand Shukla, chief executive at the Family and Childcare Trust said:

“With an increasing number of people in the workforce whose income changes week-by-week, it is clear that our childcare system is too complex and as a result, many working parents will miss out on the financial help they need. “This research reinforces the need for a complete overhaul of the childcare system. We need government to commit to a new vision for childcare that is simple to navigate and reflects the realities of working families today.”

Other recommendations include:

  • Greater flexibility to switch between the different systems to accommodate the needs of families whose incomes or childcare costs vary from month-to-month.
  • A national campaign to inform parents about financial help with childcare costs. This campaign should ensure that families in the existing support systems understand what will work best for them.
  • Raising the maximum age of eligibility for disabled children to 18 for both Universal Credit and the tax free childcare vouchers to align eligibility with the Childcare Act 2006.

The research findings and recommendations have been published in a new report by the Family and Childcare Trust – The Childcare Support Gap.

 

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Notes to Editor:

  • The Government acknowledged that there would be overlap between the two childcare support systems – tax free vouchers and Universal Credit – and in 2013 it estimated that about 50,000 families who will be receiving Universal Credit might be better off with the new tax free voucher (HM Treasury, 2013). The Family and Childcare Trust’s research led us to conclude this figure is an under-estimate. It does not acknowledge that families’ incomes vary from month-to-month or week-to-week, nor the growing numbers of self-employed people and those on zero hours contracts.
  • HMRC data shows that some 436,000 families were in receipt of the childcare element of Working Tax Credit in April 2014, out of an estimated 7.8 million families with dependent children. In 2012-2013, the average weekly help with childcare costs was £55.97 through Working Tax Credits.
  • Tax credits are being merged into the single Universal Credit, with 2017 being the target date for full implementation. The government announced in 2013 that it intends to increase the level of childcare support to 85 per cent of costs, up from 70 per cent of costs that parents receive today.
  • From September 2015 employer-supported childcare vouchers will be phased out and replaced by a tax free voucher, which is worth up to £2,000 per child per year.

Methodology:

The research comprised an analysis of labour market and tax credit statistics and 10 in-depth interviews with working parents in London, Derbyshire, Stockport and Edinburgh. These case studies were of low to middle income parents and their gross annual household incomes ranged from £8,300 to £45,000. 

About the Family and Childcare Trust

The Family and Childcare Trust aims to make the UK a better place for families. We are a leading national family charity in the field of policy, research and advocacy on childcare and family issues, with over 40 years’ experience. Our on-the-ground work with parents and providers informs our research and campaigns. We focus on the early years and childcare because they are crucial to boosting children’s outcomes throughout life and supporting parents to work.