The Daycare Trust has claimed that the chancellor's tax credit scheme, which is being introduced next month, is "hopelessly inadequate" in meeting the needs of working parents.

A spokeswoman for the Treasury, told ePolitix.com: "The value that the government places on childcare and support for families is underpinned by its record investment in childcare - around 120 times more will be spent on childcare provision in 2005-06 than in 1997-98. In addition, we are spending more than £1 million each day on supporting parents with childcare costs through the childcare tax credit.

"Our data suggest that the current cost limits within the childcare tax credits are adequate (£200 a week, £135 for one child). The average cost claimed is around £62 a week, with only 3 per cent of families at or above these limits. In London, the average claim is £82, with 8 per cent at or above the limits. These levels reflect the fact that many lone parents only work part-time and, of course, older children only need care outside school hours.

"Childcare support is working well, with over 85 per cent of eligible WFTC claimant families receiving support (90 per cent for lone parents). We will build on this success with the new tax credits, launching in April. Childcare supportwill continue as part of the Working Tax Credit in an improved, more flexible form; support will now be responsive to changes in costs and will be available for approved home childcare.

"Finally, the government is committed to keeping under review how well support for childcare costs within the new tax credits is working."

Forum Response: Barnardo's

Neera Sharma, Policy Advisor for Barnardo's, told ePolitix.com: "The government has made a start but needs to look at the cost of childcare and availability. Childcare is in short supply and the parents of disabled children are finding it increasingly difficult to find affordable care.

"A better strategy should be developed to help parents who do want to work, to get to work. There are also regional variations - this means the child tax credit is sufficient in some areas and not in others.

"Some parents moving into work often rely on informal networks. The government system does not take this into account and is therefore not flexible enough. The government needs to ensure that work pays, that poorer people can get onto the job ladder and attain a position that is worth their while.

"An example of a lady in the South-East is a perfect example of how the system is failing working parents. Claire can work 16 hours a week for £90 but finds herself worse off due to childcare fees, travel expenses and her loss of council tax benefits. The government needs to ensure that for those people who come off nbenefits, they get a guarantee of being financially better off at work."

Forum Response: Institute of Directors

A spokesman for the IoD, told ePolitix.com: "Employers are getting fed up with the government scrapping one tax credit and then introducing a new one. Smaller businesses especially are finding it difficult keeping track of the latest scheme and how it will effect them.

"The forthcoming Child Tax Credit is yet another example of the government complicating life for businesses."