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A new childcare scheme unveiled yesterday that would see some families receive up to £1,200 per child from 2015 has been slammed by those who think Cameron is engaging in social engineering. Our politics reporter James Waterson:
“Parents working part time for minimum wage will not benefit from this scheme at all and will still not be able to afford to increase their hours, leaving them unable work their way out of poverty,” said Barnado’s Neera Sharma.
Save the Children’s William Higham said: “Parents tell us that they are desperate to take jobs, but the costs of childcare are crippling. Prioritising families on lower incomes to find work would be a win-win situation – for both the economy and our country’s children.”
Allister Heath argues that there are better ways to help parents:
The subsidy to childcare will only apply when registered individuals and institutions look after the child (not family), only if both parents work (thus deliberately discriminating against families where one parent chooses to put their careers on hold to look after kids) and cuts off when one parent earns £150,000 a year (which means that a family with two parents at work earning a combined £299,999 will get help, while one with one parent who earns a few thousand a year, perhaps because they are starting up a business, and the other £150,000 would get nothing). Low income families will be helped in other ways. Families should have the right to choose their own childcare arrangements; the government should neither discriminate in favour or against those with a stay at home parent. Yet that is already what the tax code does today – because of personal allowances and progressive taxation, it is better for each parent to earn £20,000 than for one to make £40,000 – and this new rule will merely worsen this deplorable and illiberal state-sanctioned social engineering.
A much better solution would be to stop seeking to subsidise childcare – and get rid of child benefit – and introduce a new Family Transferable Allowance. This would allow parents to keep more of their income, cease distorting incentives, stop trying to push more parents into work, and would allow people to make their own choices, free of nudging from the state.