Families boosted by childcare move

More than two million working families stand to gain through a major expansion of Government support for childcare.

Under tax-free childcare plans, set out on the eve of the Budget, eligible families will receive up £1,200 a year for each child - to a maximum of 20% of their annual costs.%VIRTUAL-SkimlinksPromo%
However, the new scheme, which will replace the existing employer supported childcare programme (ESC), will not come into effect until late 2015 - after the next general election.

In order to qualify, both parents will have to be in work - or the one parent in the case of lone parent families - and each parent must be earning less than £150,000-a-year. Initially it will cover children up to five years old, but will build up "over time" to include children under 12.

Ministers say 1.3 million families will initially benefit - compared to 450,000 under ESC - eventually rising to around 2.5 million.

David Cameron said: "If Britain is going to succeed in the global race we must help those who work hard and want to get on. Too many families find paying for childcare tough and are often stopped from working the hours they'd like."

Education and Childcare Minister Elizabeth Truss said the new system would be a "very simple" process for parents, and added that no-one would be worse off in "cash terms" under the new system.

"Everybody who is currently claiming employer vouchers will be able to continue claiming employer vouchers," she told BBC Breakfast.

"But we are making the system much fairer because at the moment it is based on household. Our system is based on a per-child amount, so if you have two children you get £2,400, three children £3,600, that is much fairer, because we all know childcare costs are related to the number of children and not the number of parents."

"The scheme is also open much wider, so anybody who is eligible, who is working, can go on to the internet, sign up for an account. It is going to be a very simple process and they can receive that funding."

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