Why today’s childcare changes won’t help the squeezed middle

The government’s plans will not undo the damage from cuts to tax credits and Sure Start.

We know parents are struggling with the cost of childcare right now. Under David Cameron, childcare costs are eating further and further into household incomes. Research from the Daycare Trust shows costs have risen by 7% in the last year alone, while average hourly earnings have fallen. In one central London nursery, you would have to pay an eye-watering £42,000 a year for one full-time nursery place.

At the same time, David Cameron has been cutting support to families, including cuts to tax credits, child benefit and maternity support. By the next election, families with children will have been hit with cuts of £15bn in financial support over the course of the parliament. By 2015, these cuts will amount to £7bn a year, ten times the value of the £750m in childcare support the government is now proposing.

Worse still, under the government’s childcare plans, not a single family will get a penny before May 2015. But families need real help coping with childcare bills this year, not a vague promise of help in two and a half years’ time.

Many low and middle income earners will lose out under these plans. Families claiming childcare support through tax credits have already seen this support cut by up to £1,560 a year, yet the government’s plans will not undo the damage for many of these families.

But while many families on modest incomes are losing out, if you earn £300,000 you will benefit. The government claims this is fair – but then this is the government that is prioritising a £100,000 tax break to millionaires, so we know what David Cameron’s definition of fairness is.

Many families will lose out in other ways too. A couple who both pay basic rate tax and have one child can currently get just over £1,800 in support through the childcare voucher scheme. Under the government’s plans, this will fall to £1,200 – another blow to household incomes.

So the childcare squeeze will continue. At the same time, the government is threatening the quality of childcare with their plans to increase the number of toddlers that nursery staff look after and there are now 401 fewer Sure Start Children’s Centres than in 2010.

The government should provide immediate help to families that are struggling, not just more vague promises of help further down the line.

David Cameron and Deputy Prime Minister Nick Clegg visit Wandsworth Day Nursery on March 19, 2013 in London. Photograph: Getty Images.

Stephen Twigg is shadow minister for constitutional reform and MP for Liverpool West Derby

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Lord Sainsbury pulls funding from Progress and other political causes

The longstanding Labour donor will no longer fund party political causes. 

Centrist Labour MPs face a funding gap for their ideas after the longstanding Labour donor Lord Sainsbury announced he will stop financing party political causes.

Sainsbury, who served as a New Labour minister and also donated to the Liberal Democrats, is instead concentrating on charitable causes. 

Lord Sainsbury funded the centrist organisation Progress, dubbed the “original Blairite pressure group”, which was founded in mid Nineties and provided the intellectual underpinnings of New Labour.

The former supermarket boss is understood to still fund Policy Network, an international thinktank headed by New Labour veteran Peter Mandelson.

He has also funded the Remain campaign group Britain Stronger in Europe. The latter reinvented itself as Open Britain after the Leave vote, and has campaigned for a softer Brexit. Its supporters include former Lib Dem leader Nick Clegg and Labour's Chuka Umunna, and it now relies on grassroots funding.

Sainsbury said he wished to “hand the baton on to a new generation of donors” who supported progressive politics. 

Progress director Richard Angell said: “Progress is extremely grateful to Lord Sainsbury for the funding he has provided for over two decades. We always knew it would not last forever.”

The organisation has raised a third of its funding target from other donors, but is now appealing for financial support from Labour supporters. Its aims include “stopping a hard-left take over” of the Labour party and “renewing the ideas of the centre-left”. 

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines. 

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