THE BLOG

Is the Real Price of Childcare Child Poverty?

22/06/2015 10:32 BST | Updated 19/06/2016 10:59 BST

Paying for childcare is not just expensive - it's pushing many families into poverty, finds new research Gingerbread and Child Poverty Action Group (CPAG).

Our analysis, commissioned from Loughborough University, found 130,000 children in working families were pushed into poverty by paying for childcare. Paying childcare costs increased the risk of child poverty by a third in these families. For those with expensive childcare (paying over £50 per week), the risk of child poverty tripled. With figures out next week predicted to show a rise in child poverty, the findings are a timely reminder that low income families need more help with childcare costs now - they cannot afford any delay.

Politicians have become increasingly aware of the burden of childcare costs. The issue has quickly moved up the political agenda, and this year's general election found the main parties competing with one another around offers of free childcare and how best to help families with prices that have soared well above pay rises in recent years.

What has got less attention, though, is the need for targeted support for low income families - those struggling most. The last government's 2011 cut in tax credit support, from 80 per cent to 70 per cent of childcare costs was a severe dent to often already fragile finances for those on low incomes. Single parents were particularly affected, being unable to 'shift parent' as couples can and therefore more reliant on childcare to balance work and care. This was made clear in Gingerbread's Paying the Price project, with one single parent likening the cut to "a second mortgage".

The government has since pledged to reverse this decision and increase support to 85 per cent of costs for universal credit claimants from 2016. This was welcome recognition of the rising childcare costs; more than this, it was recognition of the support needed for the most disadvantaged families.

But there is - as ever - a fly in the ointment. Only a handful of parents can actually claim universal credit; it is only open to parents in fewer than 100 of the 750-plus Jobcentre areas, and only to new claimants. Further roll-out to new parent claimants is now on hold for at least a year.

In the meantime, the vast majority of parents on low incomes will remain on tax credits, getting the lower rate of support - and potentially for many years to come. The latest estimate from the NAO is for these 'legacy claimants' to transfer by 2019; Iain Duncan Smith told journalists he "hoped" roll-out would be complete by 2020.

Gingerbread and CPAG are therefore calling on the government to bring in the promised support for 85 per cent of childcare costs under tax credits at the same time as universal credit. This will avoid a two-tier system of childcare support for those on low incomes, and ensure all those who need the extra support will actually receive it.

The government is committed to make work pay and deliver a fairer welfare system. It also has a duty to reduce child poverty enshrined in the Child Poverty Act. Acting on childcare for those who need it most - and acting now - will go some way to realising these promises.

www.gingerbread.org.uk