Universal credit and a new childcare voucher forecast to hit struggling lower-income households hardest
Single parents with already stretched finances are bearing the brunt of government changes to benefits, charities have warned, when many are already struggling with huge increases to household bills. "Among our clients single parents have the highest levels of rent, council tax and water arrears," says Ed Ware for debt charity StepChange. "The pressure on household finances can be acute, with energy bills now a big worry despite these parents already facing substantial difficulties balancing the rising cost of living with childcare, all on just one income." Latest figures from the Office for National Statistics show that single-parent households make up a quarter of the total number of householdsin England and Wales.
The Labour government attempted to improve the finances of the 1.9 million single parent families through a raft of measures in its 1997 "family-first" budget, which included the New Deal for Lone Parents scheme to help people back into work. However, the coalition government has declared that once a single parent's youngest child turns five, they are no longer entitled to income support and must seek work or take up a job, or face having their benefits dramatically cut. But single parents say the obstacles they face to finding work with childcare and flexible working demands have not changed.
Dee Hathaway, 37, is mum to Jude, five, and earns around £400 a month working part-time for a nursery. She says her greatest financial strain comes from funding childcare during school holidays when the nursery she works at remains open. "It costs me around £400 upfront – my monthly salary – to put Jude into a holiday club for a month, meaning summer holidays can be a financial nightmare," she says. "I might resort to candles if gas and electricity goes up any more."
She claims tax credits, housing and council tax benefit and working tax credits, which will be replaced by a single payment through the universal credit. While she would like to take a training course offered by her employer and increase her hours, this would see her financially worse off due to the current benefits system: "I'd be worse off by between £50 to £100 a month because of benefit cuts, which is crazy."
Universal credit
Charities say changes to benefits fail to honour the government's pledge to "make work pay" for single parents.Universal credit, which is being rolled out across the country, is set to gradually replace six means-tested benefits by 2017. But calculations from the charity Gingerbread show that on average, single parents working on the minimum wage will lose just over £200 a year under the scheme compared with the current system.
As part of the changes, parents who receive help towards childcare through tax credits will receive up to 85% of these costs under universal credit. But those earning less than £10,000 a year – the threshold for paying income tax – will receive only 70% towards their childcare costs. A Gingerbread spokesman says: "Work has to be a route out of poverty for single parents, but we've found that under universal credit, not only will they lose out on average, they will also struggle to increase their income by taking on extra hours. The government must ensure single-parent families get the financial support they need to enter and progress in work – and with a delay in the roll-out of universal credit there's now time to make that happen."
Childcare voucher scheme
For families not claiming universal credit or working tax credit the government has said that it will phase out the employer-supported childcare voucher scheme and replace it with a tax-free "voucher" of up to £1,200 a year per child that can be claimed online. Unlike the current system, this will be available to all working parents rather than dependent on whether their employer offers a scheme.
Anand Shukla, chief executive of charity Family and Childcare Trust, says: "The proposed tax-free childcare scheme provides additional welcome financial support for childcare costs, but there are major question marks over the proposed distribution of this funding. Support is increased for those on higher incomes but is not extended to the poorest working parents, who are more likely to be single parents."
The new scheme will enable working parents, including the self-employed, earning up to £150,000 each to claim back 20% of the first £6,000 of childcare costs per child, which, according to the government, is the average annual price of a childcare place. Shukla says: "As tax free childcare will be limited to 20% of costs, a parent would need to spend £6,000 to be eligible for the full amount, so few families will actually receive £1,200 per child."
The system, which is expected to be implemented in autumn 2015, will initially apply to children up to five years old, but will be extended over time to include those up to the age of 12 years.
The vouchers can also only be used to pay for childcare registered with Ofsted in England, and the equivalent bodies in Scotland, Wales and Northern Ireland. Some parents may have to decide between extra cash in their pockets and retaining their non-registered child carer, who may be a friend or family member. Parents will have to register online with a voucher company and pay into an account; for every £8 paid in, the government will add £2, up to a maximum £1,200 a year.
No comments:
Post a Comment