Middle class gains most from child care subsidies

Higher income families are receiving a disproportionate share of
subsidised child care, a new study has revealed.

Families living on lower incomes are much more likely to rely on
more informal services, such as nannies, friends and family, which
are not eligible for subsidy even when parents have to pay for
them, according to research carried out by the Policy Studies
Institute.

The research, commissioned by the Department for Work and
Pensions and based on the Families and Children Survey 2001, finds
that 57 per cent of pre-school children and 12 per cent of
school-age children with parents who worked at managerial or
professional jobs were placed into child care eligible for
financial assistance, compared to 22 per cent and 3 per cent
respectively of children whose parents worked at manual jobs.

Thirty nine per cent of mothers who were working full time
(defined as 16 hours a week or more) were paying for their child
care. Of these, just under a third (30 per cent) were relying on,
and paying for “ineligible” care – child care that did not qualify
for financial assistance.

The report says: “This finding presents a challenge to policies
which aim to increase eligible child care placements for lower
income working families with the added incentive of a tax credit.
It appears that those forms of child care which qualify for support
from the government are disproportionately being taken up by
families who do not necessarily qualify for the child care tax
credit.”

Overall, the survey found a small rise in the use of eligible
child care provision between 2000 and 2001. Among low-income
couples in particular, the use of eligible nurseries, registered
childminders and after-school or holiday schemes increased.

The survey also found that hardship, as measured by counting 40
“essential items”, did fall for out of work families between 1999
and 2001. Increased income support and child benefit rates since
1999, led to decreased severe hardship among out-of-work families
by more than 40 per cent.

– Families and Children 2001: Work and Childcare by Diana
Kasparova, et al. Summary available at
www.dwp.gov.uk/asd/asd5/191summ.pdf
and Families and Children 2001: Living Standards and the Children
by Sandra Vegeris and Jane Perry. Summary available
at
www.dwp.gov.uk/asd/asd5/190summ.pdf