The coalition's new childcare policy: three problems

High-earners gain the most, 860,000 single-earner families lose out and the system won't be introduced until 2015.

After months of negotiations, David Cameron and Nick Clegg will announce the coalition's childcare plans today. Under the new system, parents on joint incomes of up to £300,000 (or £150,000 for a one-parent family) will be able to claim £1,200 a year for each child - or 20 per cent of childcare costs. The £750m scheme will initially cover children under the age of five and will be gradually extended to include all children under 12. Half of the funding will come from the abolition of the existing system of childcare vouchers, with the reminder switched from other Whitehall departments. An additional £200m of support will be provided through Universal Credit. 

The chief benefit of the new policy is that will offer support to those parents who do not currently benefit from the employer-funded voucher scheme, which is provided by only five per cent of employers. Around 1.3 million families will qualify for the scheme, rising to 2.5 million as it is gradually extended. In a joint appearance with Clegg later today, Cameron will hail it as "one of the biggest measures ever introduced to help parents with childcare costs" but here are three problems with the policy that the government won't be so keen to draw attention to. 

1. High-earners will gain the most from the policy, with less support provided those on low and middle incomes. In order to be eligible for support, both parents must be earning over the personal allowance (which will rise to £9,440 this April) and 82 per cent of those families likely to gain from tax relief are in the top half of the income distribution. 

While low earners will benefit from increased support through Universal Credit, with 88 per cent of recipients in the bottom half of earners, the lion's share of funding is devoted to tax relief (£750m against £200m for UC), meaning that the system is regressive overall. 

2. To qualify for the scheme, both parents in a two-earner family and one parent in a single-earner family must be in work. As a result, around 860,000 single-earner families with a child under five will receive no support. Following the withdrawal of child benefit from those earning £50,000 (but not two-earners on £49,000 each), this is another blow to stay-at-home parents. 

3. The new system won't be introduced until autumn 2015 at the earliest. The coalition had originally intended to implement it before the next election but the anaemic state of the economy meant it was ruled unaffordable by the Treasury. However, as shadow education secretary Stephen Twigg notes, the government has found £1.1bn to reduce the top rate of income tax from 50p to 45p this April.

"Parents will be disappointed that three years into this government, they will not get any help with childcare costs for another two and a half years. While working parents are promised help tomorrow, this government is only helping millionaires today."

David Cameron is pictured during a visit to a London Early Years Foundation nursery in London. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty
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On Brexit, David Cameron knows exactly what he's doing

It's not a dead cat - it's about disarming the Leave campaign. 

If you’re explaining, you’re losing. That’s the calculation behind David Cameron’s latest entry into the In-Out (or Remain-Leave in new money) battle. The Prime Minister has warned that were Britain to leave the European Union, the migrant camp at Calais – popularly known as “the Jungle” – could move to Britain. But Eurosceptic campaigners have angrily denounced the remarks, saying that there’s little chance of it happening either way.  

Who’s right? My colleague Henry Zeffman has written a handy explainer of the ins and outs of the row, but the short version is: the Eurosceptic campaigners are broadly right.

But the remarks are very far from a gaffe by Downing Street or Cameron, and they aren’t a “dead cat” strategy – where you say something offensive, prompting a debate about that instead of another, trickier issue – either.

Campaigners for Remain have long been aware that immigration remains their glass jaw. The line wheeled out by Cameron has been long-planned. Late last year, senior members of the In campaign discussed what they saw as the danger points for the campaign. The first was a renegotiation that managed to roll back workplace rights, imperilling the support of the Labour party and the trade unions was one – happily avoided by Cameron’s piecemeal deal.

That the deal would be raked over in the press is not considered a risk point. Stronger In has long known that its path to victory does not run through a sympathetic media. The expectation has long been that even substantial concessions would doubtless have been denounced by the Mail, Telegraph and Sun – and no-one seriously expected that Cameron would emerge with a transformative deal. Since well before the general election, the Prime Minister has been gradually scaling back his demands. The aim has always been to secure as many concessions as possible in order to get an In vote – but Downing Street’s focus has always been on the “as possible” part rather than the “securing concessions” bit.

Today’s row isn’t about deflecting attention from a less-than-stellar deal, but about defanging another “risk point” for the In campaign: border control.

Campaign strategists believe they can throw the issue into neutral by casting doubt on Leave’s ability to control borders any better. One top aide said: “Our line is this: if we vote to leave, the border moves from Calais to Dover, it’s that simple.” They are also keen to make more of the fact that Norway has equally high levels of migration from the European Union as the United Kingdom. While In will never “own” the issue of immigration, they believe they can make the battle sufficiently murky that voters will turn to the areas that favour a Remain vote – national security, economic stability, and keeping people in their jobs.

What the row exposes, rather than a Prime Minister under pressure is a politician who knows exactly what he’s doing – and just how vulnerable the lack of a serious heavyweight at the top makes the Leave campaign(s). Most people won't make a judgement based on reading up the minutinae of European treaties, but on a "sniff test" of which side they think is more trustworthy. It's not a fight about the facts - it's a fight about who is more trusted by the public: David Cameron, or Iain Duncan Smith, Chris Grayling or Priti Patel? As one minister said to me: "I like Priti, but the idea that she can go against the PM as far as voters are concerned is ridiculous. Most people haven't heard of her." 

Leave finds itself in a position uncomfortably like that of Labour in the run-up to the election: with Cameron able to paint himself as the only option guaranteeing stability, against a chaotic and muddled alternative. Without a politician, a business figure or even a prominent celebrity who can provide credibility on the level of the Prime Minister, any row about whether or not Brexit increases the chances of more migrants on Britain’s doorsteps helps Remain – and Cameron. 

Stephen Bush is editor of the Staggers, the New Statesman’s political blog. He usually writes about politics.