Did the Budget help families? The devil is in the detail…

Yesterday’s budget contained a number of controversial measures that will impact families. Some have been dressed up as helpful and positive while George Osborne claims others are essential.

One of the most trumpeted announcements was a new system which will see working families receive a tax-break amounting to an extra £1,500 per child each year.

Hurrah, I hear you say – but as with most things the devil is definitely in the detail.

The break will not come into force until 2015; two and a half years away. At a time when wages have stagnated, parents need help right now. Not in a few months, a year or even two years.

It was the Tory Childcare Minister, Liz Truss, who published research which revealed the average family spends 27% of their income on childcare costs.

Britain has some of the highest childcare costs in the world, with many mothers with two or more children saying it does not make financial sense to work. In addition childcare costs rise by an average of 5-6% each year, so by 2015 the cost will have mounted up significantly which will prohibit many working parents going back to work.

Osborne’s break does not, of course, benefit everyone. It will apply only to families where both parents are working. If one parent stays at home they cannot take advantage of this, neither will families benefit where one parent works a small number of hours each week and is not earning enough to pay income tax.

There is another interesting provision. If both parents work and both employers provide childcare vouchers, the Osborne scenario would allow only one parent to benefit from them.

It’s this kind of expense that puts off capable, able and motivated people (mainly women) who wish to return to work from doing so. It’s not just a problem for them but also for UK plc. Inadequate, unaffordable childcare leads to wasted talent, skill and creativity.

Labour believes that strong and sustained recovery can only be made by the many, not just a few at the top. And this is exactly right. Nevertheless the Coalition Government has squeezed those on low and middle incomes whose living standards continue to fall.

According to the TUC report, middle income households will be £1,200 a year worse off by 2015. It cannot, therefore, be right that a planned tax breaks for millionaires, due to be rolled out next month, goes ahead.

Meanwhile there are millions of hard working people forced to pay more for the Government’s economic failure, through cuts to tax credits, child benefit, maternity pay and the bedroom tax, at the same time as millionaires get an average £100,000 tax cut.

Families with children could be helped by extending Labour’s free nursery places from 15 to 20 hours a week. The TUC warned, ahead of the Budget, that the majority of UK children will be below the breadline by 2015. The Government’s welfare and tax changes combined with lower than forecast wage growth will leave the majority of children in the UK living in families below the breadline. Some 460,000 more children will be below the breadline by 2015. This is a pretty shocking statistic for any country, and as Frances O’Grady, General Secretary of the TUC, said: “For any civilised society this should be shaming.”

The Government justified welfare cuts because it supposedly targets those who are out of work. But working families are also hit hard by Government austerity policies. Single parents who work will lose the equivalent of 8.2% of their total income, as result of tax credit cuts.

Nevertheless, Osborne attempted to position himself as championing hard workers when he unveils measures which will ease the pressure on low and middle income earners with an announcement of moves towards a tax free allowance of £10,000. He will bring this forward a year to 2014. That is of course welcome.

Essentially we need more growth in the economy, even Vince Cable says the time is right to invest with record low interest rates. We must strengthen our economy for the future, while not forgetting that ‘we are all in this together’ – of course.