Sarah Coles, head of personal finance at AJ Bell, says the government’s latest summer support measures may offer some welcome relief for families, but are unlikely to make a major dent in the wider cost of living pressures many households still face.
Sarah Coles, head of personal finance at AJ Bell, comments:
“The beleaguered Labour leadership is handing out sweeteners to families for the summer. The cost of living is squeezing households hard, so the government is offering discounts and freebies to take some of the pressure off.
“The rate of VAT will be cut from 20% to 5% for everything from kids’ meals in cafes to soft play admission and theme park tickets. It’s a nice boost for hard-pressed families, and nobody is going to turn their nose up at cheaper chicken nuggets and chips. However, it’s not necessarily a massive game-changer.
“The most cash-strapped families have already made an art of entertaining the kids without spending any money, although being able to ride the bus for free will help them do so over a wider area and if they get the front seat of a top deck it could become an attraction all of its own.
“Meanwhile, savings savvy families already visit cafes offering free children’s meals, and use vouchers and loyalty points to pay for attractions and days out, so they’ll see less of a saving. For those paying full price for a day at the theme park, it’s a handy discount, but it’s still going to be one of the more expensive days of the year.
“For many working parents, the cost of all of these things is a drop in the ocean compared to the small fortune they hand over for childcare during the summer. On average, summer holiday care costs around £180 a week per child*. In England, the free 15 or 30 hours only applies during term time. You can spread it over the whole year, but anyone with 15 free hours a week will effectively see that fall to just 11.
“It means it’s worth taking steps to bring childcare costs down yourself. You can use the tax-free childcare scheme to pay for holiday care, and for every £8 you put into your account, the government will top it up by £2. It only covers providers who have signed up to the scheme, but if they’re on the list, you could save hundreds of pounds over what could still be the six most expensive weeks of the year.”
