Gordon Brown is to make an embarrassing climbdown on plans to abolish a childcare tax break, after a rebellion by female Labour MPs.
The prime minister is to announce that childcare vouchers, which benefit working families by up to £2,390 a year, will now be saved.
The U-turn follows a letter to Brown signed by nine former ministers warning that scrapping the scheme, which helps 340,000 parents, would cost votes at the next election.
The decision comes as a YouGov poll for The Sunday Times reveals that the Tories have stretched their lead from 11 points to 14 over the past month. The Conservatives are now on 41%, Labour on 27% and the Liberal Democrats on 18%.
The row over childcare vouchers has been compared with last year’s debacle over the abolition of the 10p rate of tax, which brought Labour to the brink of civil war.
Defenders of the voucher scheme, used to pay for nannies, childminders and nurseries, say they are popular with the middle-class families whose support will be vital in marginal seats.
In an interview in today’s News Review, Caroline Flint, the former Europe minister, warns that the abolition plan would be a “cap on aspiration”.
No 10 insiders said that, under a revised proposal being drawn up, parents paying the basic rate of income tax would still be eligible to claim the vouchers. Higher-rate taxpayers — those earning more than £43,875 a year — will no longer be able to claim.
The U-turn means almost three-quarters of those parents involved in the scheme — and most potential Labour voters — will still be able to benefit.
“Gordon has always said he would listen to people on this,” said a No 10 source. “There is clearly a need to look again at this issue and we hope to have something ready to announce before MPs go away for the Christmas recess.”
Under the original plan, announced by Brown in his party conference speech, the money saved by the abolition of the vouchers would have been used to pay for free childcare for two-year-olds from poorer families.
The move is the latest in a series of policy U-turns by Brown, including funding for the Territorial Army and immigration rights for Gurkhas.
The new climbdown comes after Brown met Labour rebels last week. As well as Flint, the rebel alliance includes Patricia Hewitt, the former health secretary, and Estelle Morris, the former education secretary.
By last night, a petition on the No 10 website defending the vouchers had more than 81,000 names. No 10 said: “No decisions have been made.”
Later this week Brown will try to regain the political initiative with reforms of the banking sector.
The Queen’s speech on Wednesday will contain provisions to control bankers’ bonuses, allow consumers to take US-style class-action suits against rip-off banks, and ban credit card companies from allowing customers to borrow more than they can afford.
There will also be a “living wills” plan for failing banks to be broken up and closed without requiring huge taxpayer-funded rescues.
Source. The Times
