The Treasury Committee has today backed The Childcare Voucher Providers Association’s (CVPA) call to keep the Childcare Vouchers scheme open beyond October until the extent to which parents will be made better or worse off using Tax-Free Childcare (TFC) is fully understood.
Commenting on the Government’s response to the Treasury Committee’s childcare report, CVPA Chair Jacquie Mills said:
“The Childcare Voucher Providers Association supports the recommendation to keep Childcare Vouchers open, at least until a thorough assessment of the “winners and losers” following the transition to TFC, takes place. We remain committed to working with government to achieve this as the Childcare Voucher scheme is an essential lifeline for many parents.
“We strongly advocate keeping Childcare Vouchers open alongside TFC beyond October to give parents a comprehensive and flexible support package, upon which they can make an informed choice about the childcare support that best suits their needs”.
The last-minute decision to delay ending the Childcare Voucher scheme until October demonstrated the Government’s mismanagement of its childcare policy and the pressure it now faces to keep the scheme open beyond October.
The government has said in its response that the analysis of the impact of TFC on working parents needs to take place once the scheme has had time to “bed in”. However, it is not clear when or how this will be done or at what point the scheme will have had time to bed in and therefore able to benefit families.
The CVPA has conducted its own analysis of the winners and losers from publicly available data. This found that no parents spending the national average for their family type on childcare will be better off with TFC than they would be with Childcare Vouchers (or a combination of Childcare Vouchers and tax credits where they are eligible for tax credits). It also found that those families spending twice the national average on childcare, only the top earning 20 per cent would be better off with TFC, and that government can meet its objectives of introducing TFC while remaining within the Treasury’s £1 billion spending envelope.
The CVPA believes the government’s claims distort the reality of the situation, namely that Childcare Vouchers do not support the self-employed and only support parents whose employers provide them. This fails to recognise that it was government’s decision to exclude the self-employed and that the majority of employers do offer Childcare Vouchers. Similarly, by pointing to the administrative costs of implementing Childcare Vouchers, the response fails to acknowledge the value of healthy employer-employee relationships that Childcare Vouchers help facilitate, something that TFC cannot do in the same way.