Childcare subsidy ruled out for rich couples, says Nick Clegg

Clegg: ‘We don’t need to help people earning hundreds of thousands’ (Getty Images)

Nick Clegg last night made clear that new tax breaks to help families with childcare costs would be targeted at the squeezed middle and ruled out for the richest families.

In a warning shot to some Conservative ministers who believe government help, to be unveiled later this month, should be universal, the Deputy Prime Minister said top-rate taxpayers – those earning over £150,000 – should not receive any allowances.

The Government has not yet revealed what form the help will take, but it is expected to be a tax allowance or an extension of the childcare voucher scheme currently on offer to working parents. It was set to be unveiled last month as part of the coalition's mid-term review, but has been put back because of tense negotiations between Tory and Lib Dem ministers.

Mr Clegg insisted that the new subsidy will be targeted at the "squeezed middle" – those who earn too much to qualify for tax credits, but who still struggle with the cost of care for under-fives.

Last week, the children's minister, Liz Truss, said the Government's plans would help "all families". But in an email to Lib Dem members last night, Mr Clegg said: "If we want to help the working families who struggle with childcare costs, as I do, then we don't need to help people earning hundreds of thousands of pounds a year. But we do need to help families on middle incomes, especially those with very young children who don't yet qualify for the free hours that start at three years old."

Mr Clegg has also looked at extending the 15 free hours of childcare per week, available to three- and four-year-olds and to two-year-olds from the poorest families, to one-year-olds, but this has been deferred.