Why the Government should abandon its plans to close Childcare Vouchers

The cost of childcare is one of the most important issues for working families. As such, you’ve probably been following the Government’s recent changes to childcare support – a new scheme called Tax-Free Childcare (TFC), launched in April 2017, has been introduced to replace Childcare Vouchers. Voucher schemes are due to be closed to new entrants in April next year.

However, these plans have proven unpopular with many working families who benefit from vouchers and for good reason – an online petition to keep Childcare Vouchers open beyond the planned April 2018 closure date has surpassed 100,000 signatures and will now be debated in Parliament on 15th January 2018.

While the rollout of TFC is good news for some, we believe the average family will receive less support than with Vouchers. If the Government goes ahead with its plans to close the scheme, it will a remove a vital support network that is currently relied on by 780,000 parents. The Childcare Voucher Providers Association (CVPA) is calling on the Government to keep Vouchers open alongside TFC for three reasons:

  1. Most families will be worse off under TFC** than if they were on Vouchers. The Government advertises the headline £2,000 cash saving, but that requires families to spend £8,000 a year out of their own pockets on childcare. The Department for Education’s own figures show that the average family spends around £3,276 on childcare, nowhere near that amount. This family could receive up to £655 of support under TFC whereas the same family could receive up to £1,866 with Childcare Vouchers [this figure relates to the maximum family savings, if both working parents are Basic rate taxpayers and have employers who offer childcare vouchers].
  2. TFC will have a reverse redistribution effect. The Government will tax everyone to pay for it, but families in richer regions, such as London and the South East, are likely to receive far more support than those in poorer regions. An average family in London would get three times as much support as an average family in the North East.
  3. TFC has been plagued by delays and technical issues since its launch in April 2017. Parents have struggled to create or even access their accounts, with many missing out on the top-up or even being fined for late childcare payments as a result.

Last week, Ministers quietly announced another delay, this time, for parents with older children trying to claim support. After this announcement which we believe shows the Government deliberately failed to publicise the policy because the service would be unable to cope with demand, the Office for Budget Responsibility published figures exposing the gap between expected and actual take-up of the benefit. The number of parents to have claimed TFC is less than a tenth of the expected take-up, at just 30,000 instead of the expected 415,000.

The Government has a unique opportunity to address one of the biggest concerns for working families – the cost of childcare. Their current plans to close access to Childcare Vouchers for new joiners and replace it with a scheme which is becoming infamous for delays and difficulties could risk hundreds of thousands of parents being left with no childcare support at all.

We believe that both schemes should be kept open so that parents can access the financial support that best suits their individual family needs.

What you can do – write to your MP. 

  1. Go on theyworkforyou.com and enter your postcode to find your MP.
  2. Click on the button on the top left to write to them.
  3. Ask them to stand up for working families by debating to keep Childcare Vouchers open during the debate on 15th January 2018.

*This article is written by the Childcare Voucher Providers Association.

**The Government argues that TFC will be open to more parents than Childcare Vouchers which are only open to employees whose employers offer the scheme.

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