Working parents are being hit with a ‘toddler tax’ of up to £1,700 over two years according to figures unveiled by Labour today.
Next year working parents with one child who are expecting a new baby will have their household budgets squeezed on average by £688, with a further squeeze of £1,041 the year after when their second child is born – amounting to £1,729 over two years.
These new mums will lose out from changes to tax credits, Statutory Maternity Pay, the Health in Pregnancy Grant and Child Benefit.
Lone parents with two children will have already lost £1,500 a year alone from the cut in the Childcare Element of Working Tax Credit which took effect in 2011.
Stephen Twigg, Labour’s Shadow Education Secretary and Chair of Labour’s Childcare Commission, said:
"This will be a major blow to working parents. At a time when they are already facing rising bills, including inflation-busting hikes in childcare costs, they are now being hit by David Cameron’s toddler tax.
"Instead of punishing mums who go out to work, we need to ensure that we provide affordable and quality childcare. That would be good for parents and also good for the economy – a quarter of unemployed parents say the cost of childcare is putting them off going back to work.
"Instead of threatening the affordability and quality of childcare, we need to examine best practice from Scandinavia, which provides funding for high quality nursery provision and the rate of female employment is higher."
Liam Byrne MP, Labour's Shadow Work and Pensions Secretary said:
"This is yet another hit on Britain’s striving families whilst millionaires get a tax cut.
"Ministers promised to make sure it always pays to go to work but this is a kick in the teeth for working mums already struggling to make ends meet."