Asked by: Lord Sutherland of Houndwood (Crossbench - Life peer)
Question to the Department for Work and Pensions:
To ask Her Majesty’s Government, further to the Written Answer by Lord Deighton on 28 July (WA 247) what specific estimates they have made of the expected "positive impact" of the childcare element of Universal Credit on work incentives for mothers and corresponding employment rates and tax receipts from mothers paying income tax and national insurance.
Answered by Lord Freud
The announced measures mean from April 2016, families with children who have childcare costs below the defined limits will see an improved financial incentive to work and to work more hours.
Once Universal Credit is fully rolled out many working families will face an improved incentive to work, including 100,000 families who will get childcare support for the first time under Universal Credit. The precise improvement an individual faces will vary according to circumstance.
We have not made a specific estimate of how this feeds through into employment rates and tax receipts.
Asked by: Lord Sutherland of Houndwood (Crossbench - Life peer)
Question to the Department for Work and Pensions:
To ask Her Majesty’s Government what projections they have made of the impact of the childcare element of universal credit on maternal employment rates, and the level of income tax paid by working mothers.
Answered by Lord Freud
It is well known that childcare costs can be a significant barrier to maternal employment, which is why the Government is investing in childcare in Universal Credit. Universal Credit will cover childcare costs for families where the lone parent or both parents in a couple work any hours, whereas Tax Credits childcare support is only payable past 16 hours worked per week. At Budget '14 the Government announced an increase in the rate of childcare support in Universal Credit from 70% (as per the current system) to 85% of eligible childcare costs, up to defined limits, from April 2016. These measures combined mean that around 500,000 working families will get more out of the money they earn, including 100,000 families who will get childcare support for the first time under Universal Credit.
We would expect the changes in childcare support under Universal Credit to have a positive impact on work incentives for mothers, affecting maternal employment rates and tax receipts from mothers paying Income Tax and National Insurance.