Children: Day Care

House of Lords written question – answered on 28th July 2014.

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Photo of Lord Sutherland of Houndwood Lord Sutherland of Houndwood Chair, Affordable Childcare Committee, Chair, Affordable Childcare Committee

To ask Her Majesty’s Government what projections they have made of the impact of the childcare element of universal credit on maternal employment rates, and the level of income tax paid by working mothers.

Photo of Lord Freud Lord Freud The Parliamentary Under-Secretary of State for Work and Pensions

It is well known that childcare costs can be a significant barrier to maternal employment, which is why the Government is investing in childcare in Universal Credit. Universal Credit will cover childcare costs for families where the lone parent or both parents in a couple work any hours, whereas Tax Credits childcare support is only payable past 16 hours worked per week. At Budget '14 the Government announced an increase in the rate of childcare support in Universal Credit from 70% (as per the current system) to 85% of eligible childcare costs, up to defined limits, from April 2016. These measures combined mean that around 500,000 working families will get more out of the money they earn, including 100,000 families who will get childcare support for the first time under Universal Credit.

We would expect the changes in childcare support under Universal Credit to have a positive impact on work incentives for mothers, affecting maternal employment rates and tax receipts from mothers paying Income Tax and National Insurance.

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