The Department for Work and Pensions said the Universal Credit system reimburses claimants for “up to 85 per cent of childcare costs”
(Picture: PA Archive)Families with two children claiming child benefit could be £90 out of pocket this year as inflation soars, new research has found.
With inflation rising to 9 per cent in April, the Government’s decision to uprate benefits by 3.1 per cent means millions of cash strapped families face a real terms cut to their incomes.
According to the research, carried out by the House of Commons Library and commissioned by the Liberal Democrats, a two-child family would receive £1974 a year if benefits increased in line with the Office for Budget Responsibility’s forecast for inflation of 8 per cent.
However, the Government announced last November that inflation-linked benefits and tax credits would rise by 3.1 per cent from April, in line with the Consumer Prices Index (CPI) inflation rate in September 2021.
That means child benefit rose to £1885-a-year for a family with two children.
With average energy bills rising to £1974 a year and food prices rising, the Lib Dems said the real terms cut was adding further pressure to families in London and the South East already having to deal with “ridiculously high” childcare costs.
Lib Dem leader Sir Ed Davey said: “Childcare costs are already ridiculously high in London and the South East and now the Government is hitting parents’ budgets even more. Yet again Londoners are bearing the brunt of this Government failing to wake up to the harsh realities of this cost of living crisis.”
A recent report by Coram Family and Childcare revealed the cost of childcare for children under two has risen by 2.5 per cent in a year.
Prices are highest in London, the annual survey by the charity found, with parents in inner London now paying on average £183.56 for 25 hours a week childcare for children under two.
This is 50 per cent higher than the £122.17 that parents are paying in Yorkshire and Humberside.
Nearly 900,000 families in London are currently claiming child benefit, according to Government data.
The House of Commons Library estimated that the failure to uprate child benefits with inflation was equivalent to a £566million in real terms this year.
Coram chief executive Dr Carol Homden said: “The steep increase in the cost of living and the ongoing economic impact of the pandemic means many families with children are struggling.
“Our childcare survey early this year revealed that costs continue to soar while the number of places decline. We are disappointed that amid an ongoing cost of living crisis, and off the back of a pandemic which has severely impacted children’s life chances, the Government refuses to review childcare funding and availability. Many parents, up and down the country, are locked out of work or struggling to make ends meet and childcare costs are a huge issue for millions.”
Alison Garnham, chief executive of Child Poverty Action Group, added: “Parents are increasingly having to spend their child benefit on general household essentials in the face of surging prices and real terms benefit cuts.
“That isn’t right. For almost 50 years, child benefit has been there for children as a minimum protection against poverty but its value is being eroded. Benefits must be brought in line with inflation this Autumn. Otherwise children will be the collateral damage in the government’s failure to respond to the scale of the living costs crisis.”
A Government spokesperson said: “The early years of a child’s life are the most crucial, which is why we have invested more than £3.5 billion in each of the last three years to deliver the Government’s free childcare offers, including the 30 hours per week for working parents which is supporting thousands of families. We continue to look for ways to improve the cost, choice and availability of childcare.
“The Universal Credit system reimburses claimants for up to 85 per cent of childcare costs, which is significantly more generous than the previous benefits system, and we are doing what we can to help with cost of living pressures, including spending £22 billion across the next financial year to support people with energy bills and cut fuel duty.”
