Paying to Work

Poverty is on the rise
Published on Thursday, 17 January 2013 15:22
Written by Anne Marie Carrie

Barnardo's CEO, Anne Marie Carrie, discusses the link between childcare, Universal Credit and poverty with Web Editor at Govtoday, Scott Buckler

1.What can the government do to support low income families with children whom are struggling to afford childcare?

It's impossible for some of the UK's poorest families to 'strive' their way out of poverty by working more hours, because of high childcare costs.

In fact many poor working families on the new Universal Credit will effectively earn nothing or actually lose money for each extra hour they work.

Currently all three and four year olds are entitled to 15 hours of free early years education. Beyond that, the Government pays up to 70% of childcare costs for families on low incomes. However, this still leaves the UK's poorest families struggling to cover 30% of their childcare costs.

Barnardo's is calling on the Government to increase the amount of money it covers for childcare from 70 to 80 per cent. This would go some way to giving these parents a fighting chance of working their way out of poverty because they'd actually be in a position to gain money from working more hours.

Ultimately, we want to see families earn an income they can thrive, and not just survive, on.

2.What impact will universal credit changes have on low income families?

Universal Credit simplifies the current benefits system and aims to reward low income families for working longer hours by enabling them to keep more of the money they earn. Most low earning households, for example, will lose 76p for each extra £1 they earn – a significant improvement on the current system where families face losing up to 96p for each extra £1 they earn.

However, this still leaves many low income families facing childcare bills so high that they're unable to break even – or may even be left paying to be in work. The reality is that at 24 hrs per week - the crucial point that the Government claims families can 'strive' their way out of poverty – many families won't be earning any extra money from the extra hours they work. In fact in London, where childcare costs are highest, they face paying 91p for each extra hour.

3.Are private nurseries and childcare to blame for this situation?

Nurseries and childcare providers often struggle to provide affordable childcare because of the costs they face. Property costs, and in particular the cost of staff, contribute to pushing up the price of childcare. Barnardo's believes that one way the Government could help is to make sure school buildings are made available to childcare providers during school holidays, to help alleviate some of the property costs that providers face.

4.What lessons can we learn from other countries when addressing childcare costs?

In the longer term the UK could do worse than look to the models of childcare employed in countries such as Denmark, where the government supports providers  directly and caps the maximum amount that parents are expected to contribute.

5.How is Barnardo's supporting low income families and tackling the childcare cost challenge?

Barnardo's transforms the lives of vulnerable children across the UK through the work of our projects, our campaigning and our research expertise.

We are currently calling on the Government to fund 80% of childcare costs for the UK's poorest parents & help these families work their way out the poverty trap

The Paying To Work report is now available from the website

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