Budget 2014: £2,000 child care help for working parents

The Coalition last year proposed to give parents the equivalent of their basic rate tax payments on up to £6,000 spent on child care for each child, worth £1,200 a year.

After a year-long consultation, ministers have now decided to increase the eligible total to £10,000, meaning a payment worth £2,000 for each child.

Ministers will present the scheme as delivering “tax free child care”, although it involves direct payments to working parents rather than a rebate through the tax system.

A total of 1.9 million families where both parents work will now be eligible for the scheme, the Government said. Last year, the Treasury put that number at 2.5 million.

Officials said the change was simply a new estimate about how many families have children of the relevant age, and does not mean that anyone who had previously qualified will miss out.

The reduction in the number of families expected to qualify for the scheme means that the Treasury estimate for the cost remains unchanged at £750 million.

Despite the decision to make the handout more generous, ministers have not compromised on one of the most controversial aspects of their scheme: it will only be available to two-earner families, meaning those where one parent stays at home will not benefit.

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