Q&A: Childcare vouchers plan
The government is promising more help with childcare costs, but how will it work and who will benefit?
What are ministers proposing?
They are promising that, from 2015, parents will be able to use an online voucher system, which will mean up to a fifth of childcare costs are paid for by the state. This will be up to a value of £1,200 per year per child. Initially parents of children under the age of five will benefit. This will rise over time to cover households with children under the age of 12.
Who would be eligible?
Households where both parents work will qualify. So those where one parent stays at home to concentrate on childcare will not receive the payments. Single parents must also be working to get the help.
How many hours do people have to work?
Parents claiming the benefit have to work at least 16 hours a week.
Does it matter how much parents earn?
Those on incomes of up to £150,000 a year will be eligible. Households with two working parents could earn up to £300,000 a year and still join the voucher system.
What about low-income households?
Those on tax credits will not be eligible. Instead, under an existing arrangement, if you receive tax credits and you and your partner both work 16 hours or more a week you can get up to 70% of childcare costs paid by government.
How will the new vouchers work?
Parents will be able to open an online account with a voucher provider and have their payments topped up by government. They will be able to use the vouchers for any Ofsted-regulated childcare in England and the equivalent bodies in Scotland, Wales and Northern Ireland.
What does the government say?
It is promising to free up families who say the costs of childcare - among the highest in the world - make going to work seem pointless.
The opposition argues that the changes must come in sooner than 2015 to help compensate for the damage household incomes have suffered over the past few years.
Isn't there already a childcare voucher scheme in place?
Yes, but this only operates where employers opt in to the scheme. Currently about 5% choose to do so, helping about 500,000 households. Parents are able to pay directly for some childcare out of their gross annual wage, giving some relief from income tax and National Insurance costs. This amounts to around £1,800 a year for a family with two working parents. It covers children up to the age of 15.
Is this scheme disappearing?
Parents using the existing childcare voucher system will be able to continue using that scheme instead. But people will not be able to join after the new scheme begins.
So, how many more households will benefit under the new scheme?
The government says 2.5 million will be eligible, compared with about half a million under the current, employer-backed scheme.
How much will it cost?
Ministers say it will be about £1.4bn - half coming from the ending of the old scheme, and the rest from money switched from elsewhere in the government's budget.