Childcare not included in benefits cap

Speaking in yesterday’s Lords Grand Committee session looking at the benefits cap, Lord Freud, the minister, said that childcare support would be excluded from the cap.

In an exchange with Lord Mackenzie he said

The noble Lord, Lord McKenzie, asked about childcare-specifically whether those working a small number of hours will be eligible for support for childcare costs through the universal credit. I confirm that support for childcare through the universal credit will not be affected by the cap.

Lord McKenzie of Luton: Could the noble Lord clarify whether he is saying that it will not be included in the total of benefits that is judged against the cap, or whether it cannot be withdrawn from that component of the benefit?

Lord Freud: It is the former. It may be helpful if I explain now that we feel that the best way to support these households is to exempt them completely from the impacts of the cap, rather than attempt, as these amendments do, to alter its design to accommodate their particular circumstances. For the groups to whom the cap applies, this measure creates a very strong incentive to work.

This seems to imply that families where childcare support is in payment will be exempted from the cap. As the government has said that it is extending availability of childcare to those working at all this seems a very welcome move.

There is however a presumption, in my mind, that, for couples, childcare support will, as now, be available only where both members of a couple are in work, or one in work and the other incapacitated.

Does this mean that where a couple with one working below the work limit (whatever that will be) would otherwise be hit by the cap, an hours work for the partner and an hours childcare would allow them to escape it? If neither work then will an hours work each satisfy the rule? If so, there may be an interesting structure of support and employment that could be created to achieve the result. Similarly will a single parent just need to work for one hour with childcare to escape the cap?

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