Page last updated at 16:10 GMT, Wednesday, 11 November 2009

Brown defends childcare changes

Mothers with children in pushchairs
About 340,000 parents take part in the vouchers scheme

Gordon Brown has defended his record on childcare after more than 40 Labour MPs attacked plans to phase out tax relief on vouchers used by many parents.

Nine ex-ministers have urged a rethink, saying axing the tax break, used by 300,000 families to save £2,400 a year, could hit Labour at the next election.

Mr Brown told MPs that no government "had done more" for childcare and no-one getting support now would lose out.

More than 75,000 people have now signed a No 10 petition urging a rethink.

Reassurance

As the row over the issue deepened, 43 Labour MPs wrote to the Guardian saying the plans to phase out tax relief on the cost of employer-supported childcare would penalise families with young children.

Mr Brown says this relief is badly targeted, with one third of the benefit going to higher rate taxpayers, and wants to divert money to fund nursery places for two-year-olds.

Asked about the issue during prime minister's questions, he denied suggestions from Tory MP Andrew Mackay that the move would be "immensely damaging" for working parents.

No government has done more to advance childcare in our country
Gordon Brown

No-one getting tax relief now would lose out over the next five years, the prime minister said, adding that he hoped people would "welcome" this reassurance.

"No government has done more to advance childcare in our country and support for childcare and we will continue to do so in the next few months," he told MPs.

About 340,000 parents take part in the vouchers scheme, introduced in 2005, which can be used for nurseries, nannies or child-minders.

It involves parents sacrificing up to £243 of their salary - before tax and national insurance are taken off - in exchange for electronic "vouchers" paid to Ofsted-registered child carers, from au pairs to nurseries.

The Treasury wants to phase out this tax break - equivalent to a 31% saving on the first £243 spent on monthly childcare costs for basic rate taxpayers, or 51% for those on higher rate - by April 2015.

Former health secretary Patricia Hewitt, ex-education secretary Lady Morris and former Europe minister Caroline Flint are among the MPs to call on Mr Brown to reconsider the move, saying it would lessen opportunities for two parents to work and make childcare less affordable.

According the Guardian, it says: "Withdrawing [the vouchers] will penalise a significant number of lower rate taxpayers, reduce the overall amount of funding available for childcare, reduce parental choice and impact negatively on the economy as the UK moves towards recovery.

'Wrong move'

"Crucially, in the run-up to an election, it will remove support for working parents and for businesses in key marginal constituencies."

Former minister Caroline Flint explains why she opposes the changes

Ms Flint, who resigned from the government in June criticising Gordon Brown's treatment of women MPs, urged No 10 to reconsider.

"To take something that helps parents to pay for childcare, which is still very expensive and a struggle for many families even on middle incomes, seems to be the wrong thing to do," she told the BBC News channel

Business Secretary Lord Mandelson said he would study the letter but he warned its backers to be realistic about the tough spending choices the government faced.

"If you are going into a period of public spending constraint, when you have to make difficult choices, you will have to target the resources you have at those most in need," he told 5Live Breakfast.

"They [the signatories] can't have it both ways. They can't both say that we have got to maintain all our policies and all our resources for all those benefits we currently make available and, at the same time, be fiscally responsible and rebalance our public finances in the way we need to."

Some Labour MPs have likened the anger over the issue to that which triggered the revolt over 10p tax last year.

But John McFall, Labour chairman of the Treasury Select Committee, said the current situation was a "far cry" from the 10p rebellion.

"We don't want families to lose out needlessly over this issue but we want to ensure we are helping people that should be helped," he said.



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SEE ALSO
Q&A: Childcare voucher scheme
11 Nov 09 |  Education
Parents may lose out on tax break
30 May 09 |  Business
Childcare fees 'continue to rise'
28 Jan 09 |  Education
Brown reveals free childcare plan
21 Sep 08 |  UK Politics
Free nursery place scheme grows
07 Nov 07 |  Education

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