Granny misses out on childcare pay

FAMILIES are to be given handouts to help pay for nannies under sweeping changes to the tax credits system. Help will be extended to those hiring people to care for children in their homes. Parents earning up to £58,000 a year will be eligible.

The shake-up means working mothers will be able to use State benefits to pay nannies and childminders to come to their homes and look after their children.

However, the army of grandparents who regularly help care for children at home while parents are at work will not qualify for any financial assistance.

A spokesman for the Department for Education and Skills said: 'The Government does not think it appropriate to intervene in private family arrangements.'

The plan, due to be launched next April, was under fire last night as a 'taxpayer subsidised campaign to lever hundreds of thousands of mothers into jobs when they currently prefer to stay at home to bring up their children'.

Critics urged ministers to pay childcare subsidies to stay-at-home mothers.

Sociologist Patricia Morgan, an author on State support for the childcare industry, said: 'This new scheme will encourage an army of poorly-paid women to go to work as a kind of sub-nanny bringing up the children of other women. It's extraordinary that Labour is so determined that children be brought up not by their mothers but by other women.'

At present, childcare payments under Chancellor Gordon Brown's Working Tax Credit system are limited to parents who send children to nurseries or registered childminders. From next year, they will be extended to nannies and childminders working in families' homes. Credits will be paid in wage packets by the Inland Revenue.

Nanny payments of up to £140 a week will be available for low-income parents with two children. Those earning near the £58,000 ceiling for claiming credits will get much less.

A quango will approve nannies and check they 'meet the minimum criteria of training and suitability'.

The bar on help for relatives will hit thousands of working mothers, especially single parents, who rely on grandparents to look after their children.

A recent survey found that more than one grandmother in three spends more than half a working week caring for their children's children.

The charity Age Concern estimates that grandparents save working mothers more than £26m a week in childcare payments.

Children's Minister Margaret Hodge said the expansion of childcare handouts would 'give working families real choice'. She added: 'Expanding financial support should help thousands more families.'

The nanny subsidy is likely to push the cost to taxpayers of childcare payments to £1bn a year.

Ministers point out that the system has reversed the decline in numbers of childminders, and that nearly a million more children have been placed with them since 1997.

Critics warn that children can be damaged psychologically by spending long hours in childcare away from their mothers.

Sociologist Miss Morgan added: 'I await the day ministers agree to pay subsidies to parents. But it won't happen because they come from the 1960 generation whose ideology is that every mother must go out to work.'

The credit system

TAX credits were unveiled after Labour took power in 1997. There are two, introduced last year to replace earlier versions.

Child Tax Credit goes to the person in the household looking after children, whether or not they work. Taken with Child Benefit,it provides an extra £58 a week for anyone with one child whose household income is less than £13,000 a year, and £26.50 a week for those on higher incomes.

Working Tax Credit is available to those employed for 16 hours a week or more. It adds around £70 a week to the pay packets of people on less than £13,000 a year.