10,000 POUNDS GUARANTEED INCOME FOR LOW-PAID FAMILIES

The new Working Families Tax Credit (WFTC) will guarantee the lowest paid families a full-time income of around 10,000 Pounds a year, announced Paymaster General Dawn Primarolo today, easing both the poverty and unemployment trap.

The WFTC, which replaces Family Credit from October this year, will:

benefit 1.3 million families;
guarantee a full-time income of more than 190 Pounds per week;
ensure, with a new childcare tax credit, that no family is denied the opportunity to work by being unable to access affordable quality childcare;
help parents - whether lone parents or couples - with up to 70% of their childcare costs, up to a maximum of 100 Pounds a week for one child, and costs of 150 Pounds for two or more in eligible childcare.

The Paymaster said:

"WFTC is a radical approach to an age-old problem; for the first time, it will make work pay, guaranteeing an annual full-time income of 10,000 Pounds for all full-time working families. It will help thousands of families in Britain move from welfare to work.

"But a major problem faced by many parents with young children who want to return to work is the cost of childcare. In the past, cost and access to good quality childcare has denied many parents the opportunities to rejoin the workforce. Not only has that had an effect on parents' confidence in their own abilities, but it has also denied Britain a major pool of talent and potential.

"Now, with the introduction of a childcare tax credit within the WFTC, parents will get help with up to 70% of their childcare costs. That will mean help with costs up to 100 Pounds a week for one child and 150 Pounds a week if two or more children are in childcare. Parents - whether lone parents or couples - will now have the opportunity to work, if they wish to. Easing the unemployment and poverty trap has been a major priority for this Government, and WFTC is an essential part of tackling this problem."

NOTES TO EDITORS

1. The new Working Families Tax Credit (WFTC) and Disabled Person's tax Credit (DPTC) will replace Family Credit and Disability Working Allowance from October this year. The new tax credits are to be introduced by the Tax Credits Bill published at the end of last year.

2. The childcare tax credit will help meet the cost of quality childcare by allowing parents who apply for WFTC to claim 70 per cent of their childcare costs up to maximum costs of 100 Pounds per week if they have one child in eligible childcare, going up to 150 Pounds if two or more children are in eligible childcare.

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Press Notices 1999 January to June index