Legal News

Research by the Institute for Public Policy Research (IPPP) has found that from 2018 families could be as much as £2,000 per year worse off as a result of the Chancellor’s proposals in the Autumn Statement.

The IPPP research was published before Chancellor George Osborne’s interim budget last week.

Full-time childcare currently costs £10,970 based on both parents working and earning the estimated average salary of £21,555 each.

Based on current prices, childcare would rise to £12,610 by 2018 – an increase from 25.4% of an average joint salary to 27.8% for a family of four with two children aged two and four.

The IPPP’s associate director Dalia Ben-Galim said:

“Tax-free childcare on its own will not make childcare more affordable for families.

“The government has not got a plan to regulate the market nor control prices – which makes pumping tax relief into the system a short-term fix, with long-term price rise consequences.”

The minister for women and inequalities Maria Miller has called on business to help women be more successful at work by promoting more flexible working hours to enable them to manage both family and career.

From 2015 a new shared system of maternity/paternity leave will be introduced to enable parents to share leave entitlement.

There will also be government tax breaks introduced to help families afford full-time childcare so both parents can return to work.

Following the Chancellor’s Autumn Statement, Labour Shadow Chancellor Ed Balls has said that families are being squeezed, however.

Mr Balls said that since the coalition government had come to power in 2010, families were on average around £1,600 worse off – and cost of living forecasts meant this would continue until the 2015 General Election.

Labour also said that the Autumn Budget had hit women who were pregnant or planning to have another child with a “Mummy Tax”. Women are paid 90% of their salary for the first six weeks of maternity leave – and £134.45 for the remaining 33 weeks. An annual 2.2% rise – which would have netted future mums with a £3 per week increase – has been reduced to just £1.35 per week; meaning that in 2015, maternity pay will be £180 lower than it should have been.

Fathers currently also receive the same rate for two weeks of paternity leave and so this cut will also affect their statutory pay.

There is currently a freeze on child benefit until 2014, when the Chancellor has set an increase of just 1% – estimated to be an average of just 20p per week.

In response to the Autumn Statement, the Child Poverty Action Group said that families had been pushed to the forefront of coalition budget cuts once again.

Labour women’s spokesman Yvette Cooper MP said:

“New mums are paying a heavy price for George Osborne’s economic failure.

“This real terms cut in maternity pay is effectively an £180 Mummy Tax on working women – and it’s bad for the whole family.”

Labour claims that women will lose out to the tune of £867 million as a result of the Chancellor’s £1 billion package of changes to direct tax, tax credit and benefits, as set out in the Autumn Statement.

Duncan Lewis Family and Childcare Solicitors

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• Child contact and residence
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For expert legal advice on family and childcare law, Contact Duncan Lewis family and children’s solicitors on 020 7923 4020.