Childcare Vouchers industry responds to government’s childcare policy

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.

Contact:

 

Notes for editors:

  • The CVPA is the industry association established to represent the views of childcare voucher provider companies. CVPA members establish self-regulation of the childcare voucher industry, providing a benchmark in terms of quality of service employers can expect.
  • According to the Department for Education’s most recent figures, the average family spends £2,014 a year on childcare.
  • A two-parent family where both parents are paying the basic rate of tax can save up to £1,866 a year with Childcare Vouchers.
  • There are over 780,000 parents currently using Childcare Vouchers. Childcare Vouchers have benefitted millions of parents since their introduction in 2005.
  • Summary of winners and losers:
Winners Losers
Families with two working parents on higher wages (in the top 10 to 34 per cent of earners) who already have enough surplus income to spend substantially more than the national average on childcare. All working families spending the national average on childcare.
Families where both parents are self-employed and do not operate through a registered company.[1] All couple families with one working parent.
Self-employed single parents who do not operate through a registered company. All parents spending twice the national average on childcare but not in the top 10 per cent of earners.
Single parents spending twice the national average or higher on childcare and in the top 20 per cent of earners. All parents spending four times the national average on childcare but not in the top 34 per cent of earners.
  All families spending the national average on childcare based on their relative amount of deprivation.

[1] Many self-employed actually operate through a company with no employee other than themselves or their partners. There were 4.3 million of these “non-employing businesses” according to the FSB https://www.fsb.org.uk/media-centre/small-business-statistics. Any that are registered as a company are actually eligible for Childcare Vouchers. So the proportion of the population that is genuinely self-employed and unable to benefit from childcare vouchers is likely to be low.

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