BREAKING NEWS Cuts to tax credits will make it harder for parents to return to work, charities say

In his speech, the chancellor George Osborne said that the childcare element of the Working Families Tax credit would reduce to 70 per cent. Parents will also now have to work at least 24 hours a week to meet the new criteria.

Currently parents are able to recoup up to 80 per cent of their childcare costs.

The drop to a maximum of 70 per cent means that working parents, who can currently claim the maximum of £240 a week, will in future only be able to claim up to £210 a week.

The National Day Nurseries Association said they were concerned about how the cut would impact on low-income families and nursery owners.

NDNA chief executive Purnima Tanuku said, ‘Parents’ ability to work or train is central to the successful recovery of the economy but reducing the amount of childcare costs a parent can claim will hurt the poorest parents the most.

'Low-income families are the ones that can claim the highest proportion of childcare fees and a reduction to only 70 per cent of their costs could mean that families cannot balance their finances.

‘There may also be cases where an employer is unable to offer additional hours to meet the new criteria of parents working 24 hours per week, so the contribution to childcare costs may be lost entirely and work is not an option. Nurseries will be very concerned that this move will hit the families who stand to gain the very most from their child being in high-quality childcare.’

The NDNA also said that, while they welcomed the commitment to the 15 hour entitlement and more places for disadvantaged two-year-olds, they were concerned that the losses that many nurseries were incurring through providing free places was affecting nurseries’ ability to survive.

‘The ultimate affect of the reduction in Working Tax Credits could be that nurseries struggle even more as parents either find work does not pay because of childcare costs, or cut down on their usage by turning to informal care. NDNA will be urging Government to look at this as part of the Single Universal Credit system, as work will not pay if childcare costs are not considered and supported.’

The charity Working Families said that the cut would also affect part-time and flexible working because parents will need to work at least 24 hours a week to claim Working Tax Credits.

Sarah Jackson, chief executive of Working Families, said, ‘Reducing funding for childcare costs makes it £30 a week harder for a parent to go back to work.

'We know that high childcare costs are a significant work disincentive and parents struggle to pay them now.  It is difficult to imagine how this cut will support the Government’s promise that work will always pay.

‘We’re also disappointed that couples will now have to work at least 24 hours a week to be entitled to Working Tax Credits.  A single earner on the minimum wage working 16 hours a week will see their family’s income reduced to less than the amount they’d get from claiming Jobseekers’ Allowance as a couple– a real disincentive to work.

‘Why is the Government creating disincentives for part time work now?  With almost a half a million jobs in the public sector under threat, the Government should be sending out clear messages about limiting job losses through flexible and part-time work. 

'The first step before making anyone redundant should be to see if changing hours is a real alternative to job losses. There are recent examples of private sector businesses reducing hours and saving both jobs and money.’