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Labour warns of £600m fall in tax-free childcare

Childcare Photo: Dominic Lipinski/PA

Spending on a Government scheme intended to help working families with the costs of childcare is set to fall by hundreds of millions of pounds, Labour has warned.

The party said analysis of Office for Budget Responsibility (OBR) forecasts, released with last week’s Budget, showed spending on the tax-free childcare scheme (TFC) was projected to be down £600 million over the next four years compared with the last forecasts in March.

Under TFC, HM Revenue and Customs tops up the sum parents pay for childcare by up to 20%, up to a maximum of £2,000 per child per year.

Shadow education secretary Angela Rayner said the latest figures showed families would not get the support they need.

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“Austerity is clearly not over for hard-pressed families,” she said.

“The Budget has completely failed to provide children with the best possible start in life, and parents will once again be left without support in accessing the childcare they need.

“The fact that projected spending has fallen by hundreds of millions of pounds yet again means thousands of parents will not be getting the support they need with the cost of childcare.”

Conservative Party vice chairman Tom Pursglove said the Government’s “balanced” approach to the economy would see a real-terms increase in childcare spending since 2010 of £6 billion a year by 2020.

“This includes delivering our commitment to provide working parents of three and four-year-olds 30 hours free childcare a week – helping them balance work and family life and give children the best start in life,” he said.

“Labour don’t know how to handle the economy which means they wouldn’t be able to provide the funding our children need.”