Childcare voucher companies lose battle to keep scheme open

After midnight tonight, parents not already using childcare vouchers will only be able to receive childcare support through the Government’s Tax-Free Childcare.

This is despite opposition from MPs, employers and parents to close the childcare voucher scheme to new parents.

• Employers back campaign to keep childcare voucher scheme
• Opposition MPs call for childcare vouchers debate in parliament
• Guide to: Tax-Free Childcare vs Vouchers

A campaign to #SaveChildcareVouchers, launched by the Childcare Voucher Providers Association (CVPA), received the backing of 278 employers, representing more than 140,000 employees.

On top of this, 69 MPs signed a second Early Day motion urging the Government to keep the scheme open until a more thorough analysis was completed of the 'winners and losers', which was also a recommendation of the Treasury Committee.

The childcare voucher scheme was originally due to close in March, but the Government granted a six-month extension in response to a petition signed by 10,000 people.

According to analysis by the CVPA, no working parent spending the national average on childcare would be better off on Tax-Free Childcare than they would be on childcare vouchers, or a combination of vouchers and tax credits.

While some families will be better-off on Tax-Free Childcare, the CVPA says that there are many who are ineligible for Tax-Free Childcare.

One parent from the East Midlands said, ‘I had no idea of the impact the scheme’s closure would have, but when I received a new job offer, I used the Government calculator and found out I’d lose out on hundreds of pounds towards my childcare costs if I change employment.

‘As I would change employer after the schemes closure, I would not be entitled to sign up to childcare vouchers at my new employer. With other financial losses, I have been forced to stay with my current employer despite having limited ability to develop as a professional female engineer, whilst also being a single mum. I will also be forced to suffer the increasing negative impact on my mental health caused by issues with my current employer.’

Jacquie Mills, chair of the CVPA (pictured), said, ‘It is disappointing the Government is going ahead with its decision to close childcare vouchers to new entrants today. This is a vital form of childcare support that working parents rely on, and for employers whose staff who would struggle to manage work and home life without it. 

‘While Tax-Free Childcare will benefit many families, thousands will be worse off.  Parents who change job after 4October, staff on rotation such as in the health service, and parents to be, are now going to miss out on the support offered by childcare vouchers. 

‘The reality of rising childcare costs will persist, and the closure of childcare vouchers today will only increase the financial pressures facing working families.’

An HMRC spokesperson said, 'Tax-Free Childcare is available to working parents regardless of where they work and to the self-employed, making it fairer and more accessible than vouchers – which are only offered by some employers. 

'It will provide support to nearly 1 million more families compared to those currently using vouchers. It’s also paid per child rather than per parent, so lone parents can access the same support as couples, and parents get more support as their childcare costs rise.

'Parents who are already getting vouchers can continue to do so, as long as they stay with the same employer and they continue to run the scheme'.