Daycare Trust provide their reaction to the impact of the Comprehensive Spending Review on Childcare

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The Chancellor George Osborne published the Comprehensive Spending Review (CSR) on 20 October 2010, setting Government spending for the years 2011/12 to 2014/15. Over this period Government will cut £81 billion from Government spending, including £7 billion in welfare cuts, on top of the £11 billion of welfare cuts announced in the emergency budget in June 2010.

Daycare Trust has analysed the CSR to consider what the impact will be on childcare, and therefore on the millions of families who rely on childcare services. Their overall view is that families will find it harder to pay for childcare as a result of the CSR, particularly lower income families who rely on Tax Credits. However they were pleased that the free early education for three and four year olds was protected, and that additional funding has been found to pay for 15 hours per week of childcare for disadvantaged two year olds.

Free entitlement to early education

Main announcements:

• Free entitlement to early education for three and four year olds at 15 hours a week protected.

• The most disadvantaged two year olds (the poorest 20% of families) will also receive the 15 hours free early years educational entitlement from 2012.

Their response

“We are delighted to see the Government acknowledge the importance of investing in early years. There is overwhelming evidence that investing in the first years of a child’s life has the potential to transform their future, yet spending on early years education and care is tiny in comparison to secondary and higher education budgets. In cash term, 15 hours of nursery care is equivalent to £49.20 per week for each child in England. This rises to £58.20 a week for children in London.”

Sure Start & early intervention

Main announcements:

• Sure Start budget protected in cash terms.

• Sure Start to be focused on its original purposes of improving the life chances of

disadvantaged children.

• More community providers to be encouraged to run Sure Start Children’s Centres, with a

new focus on payment by results.

• Funding includes new investment in Sure Start health visitors.

Their response

“Daycare Trust welcomes the recognition of the value of Sure Start Children’s Centres but remains concerned that protecting funding in cash terms marks a reduction in real terms because of inflation.

We would also like clarity on how the 4,200 health visitors will be funded and recruited, where they will sit within the existing structures, and whether existing outreach services will be cut in order to pay for these new health visitors.

Whilst we welcome the Government’s recognition of the benefit that Sure Start can have for disadvantaged families, we also are concerned that the Government’s call for Sure Start to be “refocused on its original purpose” might mean that its essential nature as a universal service for the whole community is lost.”

Tax Credits

Main announcements:

• Basic and 30-hour elements of Working Tax Credit to be frozen from 2011/12.

• Childcare Element of the Working Tax Credit will be reduced to pay a maximum of 70% of

childcare costs (rather than the current 80%) from 2011/12.

• Child Element of the Child Tax Credit to increase above inflation by £30 in 2011 and £50 in

2012.

• Parents must between them be working a total of 24 hours a week in order to be eligible to

receive the Working Tax Credit. Currently one parent must be working 16 hours in order to

qualify, although currently both parents are required to be working 16 hours in order to

claim the Childcare Element. As far as we aware this will remain the same.

• The Government will go ahead with a Universal Credit to replace all benefits and Tax Credits.

Their response

“We are very concerned by the decision to freeze Tax Credits and to reduce the maximum amount of childcare costs paid through the Working Tax Credit from 80% to 70%. This will affect many of the 488,000 families who currently receive support for their childcare costs through Tax Credits, 64% of whom are lone parents.

The cut equates to a loss of up to £1,560 per year for families who are already struggling with the burden of extortionate childcare costs. Parents in the UK contribute more towards childcare costs than any other OECD country, and this will be made more difficult after these announcements, even after taking into account the increase in the Child Tax Credit. Furthermore, this is on top of cuts already announced in the June budget such as abolition of the Child Trust Fund, the restriction of eligibility for the Sure Start maternity grant to the first child only and the abolition of the Health in Pregnancy Grant.”

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