Families could get free childcare in rule overhaul

More families could be eligible for free childcare under a possible shake-up to the Government’s rules, Jeremy Hunt has suggested.

The Chancellor has already announced a move to start calculating eligibility for child benefit using a family’s household income rather than the income of individual earners.

He told MPs that other measures such as childcare could also be based on household income in future in a potential boost for upper-middleincome families.

Mr Hunt (inset) told the Commons Treasury Committee it could take a decade to achieve his aim of abolishing workers’ national insurance (NI) payments altogether amid growing pressure from Labour to set out how the policy would be funded.

The Chancellor used last week’s Budget to launch a plan to end the system whereby child benefit starts to be withdrawn from taxpayers who earn £50,000 or more, regardless of whether or not they have a partner in work.

The rules are seen as unfair because they mean a single parent earning just over the threshold would be penalised while a couple living together could have a joint income of nearly £100,000 without losing out.

Mr Hunt has said changing the system by moving to an assessment of household earnings will take at least two years, because His Majesty’s Revenue and Customs (HMRC) needs to update its technical systems.

He told the committee: “If we find a solution, that could be a solution to problems we have with other things, like childcare, which are also based on one person in the household earning more than £100,000.

“But the first thing I want to do is to see whether we can do this at all, there are people who have profound

objections to HMRC collecting data on a household level, so I want to test parliamentary opinion on that, and see if... we can solve it for child benefit before we consider other steps.”

A senior Government source said any decisions on how to make further changes to the tax and benefits system would be made after the general election, telling i: “HMRC having that data would be very useful for future governments.” The overhaul would also allow certain tax breaks such as the marriage allowance to be based on household income. Mr Hunt also told MPs his idea of abolishing employee NI contributions entirely would take more than one Parliament to accomplish.

Labour is pushing the Chancellor to explain how the policy could be enacted without cuts to the state pension or the NHS, or a significant rise in income tax.