Parents hoping for major support to relieve the burden from some of the most expensive child care costs in the world may be disappointed by the UK spring budget, according to a KPMG tax expert.
(Bloomberg) — Parents hoping for major support to relieve the burden from some of the most expensive child care costs in the world may be disappointed by the UK spring budget, according to a KPMG tax expert.
A multi-billion-pound plan to expand free child care for one- and two-year-olds in England is likely off the table, according to Tim Sarson, UK head of tax policy at the firm, adding that the Treasury is “unlikely to make another U-turn” after signaling it won’t back the reform. Internal government estimates put the price tag of such a plan between £5 billion and £10 billion, according to a media report.
Chancellor Jeremy Hunt may consider a range of more affordable alternatives such as increasing child care vouchers offered through salary-sacrifice schemes or treating childcare costs as tax deductible against gross income.
These options would be much cheaper when compared with a huge expansion of free child care, according to Sarson. Still, he said these policies have only a 30% chance of showing up in the March 15 budget.
Hunt has come under pressure from wings of his party to deliver more support to parents on childcare but he has publicly warned that he must be fiscally prudent. This means that he is unlikely not to mention the issue entirely.
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Reforms that have been floated — with a lower expense to the Treasury — could include an overhaul of ratios on carers and encouraging more people to take up existing support by making the system more user-friendly.
While the government is attempting to balance the need to fight inflation with calls for loosening the public purse strings, mothers are facing a tough choice of whether to stay in the labour force. 75% of women paying for child care in the country say it doesn’t make financial sense to work, according to a report this week by charity Pregnant Then Screwed.
The opposition Labour party has pledged to overhaul the child care system if it wins power and said it would move the UK toward a new system that runs from the end of parental leave until a child is 11 years old.
Instead of undertaking an expensive overhaul of child care, the government is likely favour appeasing older voters through measures such as unfreezing the pensions scheme allowance. Put simply, such a move targets a key Conservative voter group and “it’s not that expensive,” Sarson said.
–With assistance from Emily Ashton.
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