Julia Waltham is Head of Policy and Communications at Working Families and Aoife Hamilton is Policy and Information Manager at Employers for Childcare. This post is sponsored by the Childcare Voucher Providers Association.
Theresa May has put ordinary working families at the heart of her domestic agenda. This is reflected in the Government’s objective to improve access to childcare and assist families with household budgets, helping more parents go out to work, or work more. However it is against this backdrop that the Government is implementing a policy that will penalise ordinary working families, defeating its own objective.
Childcare Vouchers, a vital form of support that have helped millions of parents across the UK to access childcare and get into work, are closing to new entrants on 4th October 2018. They are being ‘replaced’ by the new Tax-Free Childcare scheme.
However, this policy is based on an assumption that to operate one scheme the other must be closed. Not only is this unnecessary, it also misses the opportunity to offer a truly comprehensive package of support allowing families to choose the assistance best suited to their needs. Removing either pillar of support creates a system where some families stand to be financially worse off and some may no longer be able to afford to remain in work.
Tax-Free Childcare and Childcare Vouchers are fundamentally different in their targeting and provide greater benefits to different families depending on their circumstances. Neither is sufficiently comprehensive to provide the best support to all working parents. Retaining both schemes enables parents to choose the support best suited to their needs, and provides a natural progression supporting parents to get into, and advance in, the workforce. Furthermore, retaining Childcare Vouchers means parents of children between 12 and 16 don’t lose out (Tax-Free Childcare is only available for parents with children under 12, whereas Childcare Vouchers are for parents of children under 16). Importantly, offering this comprehensive package of support can be achieved within the Government’s overall budget for childcare support.
Unlike Tax-Free Childcare, Childcare Vouchers can be accessed alongside Tax Credits or Universal Credit. This is beneficial in supporting parents into employment by providing additional help with childcare costs for some claimants alongside a scheme that aspires to support parents to enter and progress in work. Gradually, should parents increase their hours of work or experience an increase in household income, Childcare Vouchers can continue to support them as their Tax Credit or Universal Credit support decreases. They can then progress onto Childcare Vouchers exclusively or Tax-Free Childcare depending on what is best for their family.
A move directly from Tax Credits or Universal Credit to Tax-Free Childcare results in all tax credits and universal credits stopping completely – not simply support for childcare costs. To make this jump therefore typically requires a significant increase in income for families, for some this is unlikely to be achievable without support to transition to a higher income more gradually. Should Childcare Vouchers close as planned, the potential for this more gradual transition will be eroded.
Robust evidence gathered by Employers For Childcare’s independent Family Benefits Advice Service – based on calls from over 7,000 UK families – shows Childcare Vouchers provide the best form of support for over one third of families, and the potential of additional vital support for a further third currently benefiting from Tax Credits or Universal Credit. These families stand to lose out should the scheme close. However, for one third of their callers, Tax-Free Childcare is the best option, which is why we are urging Government to keep both schemes open in tandem. This is working well at present – providing a comprehensive, flexible package of support for working parents based on choice.
In June the Treasury Committee, chaired by Nicky Morgan, again urged that Childcare Vouchers should be kept open until there is a better understanding of the ‘winners and losers’ of closing it to new entrants. This follows its inquiry into Government childcare policy which highlighted insufficient analysis into the impact of closing Childcare Vouchers.
Childcare support is an issue the public cares about. A petition to keep Childcare Vouchers open exceeded 119,000 signatures, making it one of this year’s most popular petitions.
The decision to close Childcare Vouchers was made by the Coalition Government so there is no reason why the current Government should be wedded to it. This presents an opportunity to announce a policy that is in line with the Government’s own stated objectives, and will be universally well received by parents, childcare providers and employers across the country allowing the Government to position itself firmly on the side of ordinary working families, without requiring significant additional financial investment.
Childcare Vouchers give a central role to employers, who value the scheme and its support for working parents. Working Families have highlighted that the scheme provides a mechanism for employers to engage with staff and demonstrate their commitment to family-friendly working practices. 185 national employers – including Kettle Foods and Barnardo’s – representing more than 80,000 workers, have signed a petition urging the Government to reverse its decision and keep Childcare Vouchers open.
We, together with charities, business leaders, MPs and parents across the country urge the Government to reconsider the decision to close Childcare Vouchers.
There remains time for common sense to prevail and for the Government to invest in achieving its own stated objectives. But this time is running out. Heading towards Conference, the Government can act now to demonstrate its commitment to delivering an economy that works for everyone, and a childcare system that supports future generations.
For more information, and to back the campaign to save Childcare Vouchers, please visit https://futureofchildcaresupport.com/