Rhetoric doesn't match reality for working parents following cuts announced by the Chancellor

20 October 2010

Parents will find work less financially rewarding following the Comprehensive Spending Review says the Social Market Foundation.

The decision to freeze all elements of the Working Tax Credit for three years and reduce the maximum level of money given to help pay for childcare support available to working parents will mean that low- and middle income working families will lose out. The SMF's calculations suggest a family with two or more children could lose up to £36.80 per week or up to £24.30 per week for one child.

Commenting, Director of the SMF Ian Mulheirn said:

"The Government has made a fanfare of its plans to make workpay. But freezing Working Tax Credits and reducing financial support for childcare will see many low and middle income working parents substantially worse off at the end of each month. This doesn't fit with the Government's rhetoric. Working Tax Credit was introduced to make it more financially rewarding to return to work. For parents on modest incomes this will be a major blow to their incentives to work."

Editor's Notes

  • Childcare support through the tax credits system currently reimburses working parents for 80% of childcare costs, up to a maximum of £175 per week for one child and £300 per week for two or more  children. The spending review announces that this proportion will be reduced to 70%.

  • The spending review announces that the Working Tax Credit will be frozen for three years. The maximum award is currently £4,600 per year.

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