HMRC apologises for Childcare Service performance

Wednesday, August 23, 2017

HMRC has apologised for the difficulties faced by parents trying to access its Childcare Service.

Responding to a letter from Nicky Morgan, chair of the Treasury Committee, at the beginning of the month demanding answers about the performance of its Childcare Service, HMRC’s chief executive and permanent secretary John Thompson says he is ‘very sorry that some parents’ have experienced problems with the Service and says they are working to improve things.

Where necessary, he says, HMRC is continuing to issue 30 hours childcare codes manually and paying parents the Government top-up for Tax-Free Childcare when they have been experiencing difficulties accessing the service because of technical issues.

While Ms Morgan says significant improvements to the website are welcome, she argues that further improvements are required as there are still thousands of parents who can’t apply for the childcare they are entitled to.

She said, ‘Whilst it is welcome that HMRC has made “significant improvements” to the website since it was launched in April, thousands of parents are still unable to apply for the childcare to which they are entitled in the way that the Government has envisaged.

‘Clearly further improvements are still required.

‘The Committee will no doubt want to question representatives of HMRC on the technical issues with the Childcare Service website when they are called to give evidence.’

Within his reply, Mr Thompson reveals that at the time of writing (17 August), of the 244,000 parent applications received, 208,000 have been found eligible for Tax-Free Childcare, 30 hours, or both, and have their codes and accounts. He says the vast remainder are undergoing additional eligibility checks by HMRC as part of the normal process, or are ineligible.

As of 8 August, there had been 257,407 calls to the helpline. This includes general queries about eligibility, as well as parents experiencing technical difficulties, parents calling about 30 hour codes and responding to letters requesting more information.

The Childcare Service has received 1,507 complaints, which HMRC says represents less than 1 per cent of all customers.

In response to Ms Morgan’s questions, the letter also reveals:

  • As of 16 August, 208,000 parents had successfully applied for a Childcare Service account, 100,000 for 30 hours only, 21,000 for Tax-Free Childcare Only, and 87,000 for both;
  • As of 8 August, a total of 18,292 applications had not been completed by parents. HMRC says that many parents exit the service and do not complete their application when they realise they are not eligible.
  • 4,227 parents have closed their accounts. More than 2,000 of these have done so because they have decided they would prefer to remain on tax credits (parents cannot claim Tax-Free Childcare and tax credits at the same time);
  • Of the 1,507 complaints received, 90 per cent have been concerned with technical issues, 1 per cent are about eligibility and 1 per cent are about customer service.
  • As of 8 August, the average wait-time for accessing the helpline was 1 minute 17 seconds. However, some callers are finding that there is currently an average wait time of 30 minutes to speak with an advisor;
  • HMRC has issued 1,138 30 hours codes manually and made 373 payments to childcare providers on behalf of parents;
  • As of 8 August, a total of £45,687 had been paid as compensation in lieu of the Government top-up parents would have received if they had been able to access their accounts and as redress. This was before HMRC announced parents can put in a claim for compensation if they have had problems accessing their Tax-Free Childcare account because of technical probems;
  • Just under five per cent of users have experienced at least one ‘technical difficulties’ screen as some point during their application;
  • The website has been down for 160 hours and eight minutes, including for planned updates and maintenance, since 21 April when the service was launched. Overall system availability has been 94 per cent.

Mr Thompson also confirms that the service is ‘on track’ to meet the Department for Education’s estimate that 200,000 parents will have successfully applied for the 30 hours and received an eligibility code by 31 August.

Sector response

The Pre-School Learning Alliance called Nicky Morgan’s intervention on the matter ‘too little, too late.’

Its chief executive Neil Leitch said, ‘We recognise that HMRC are working hard to rectify the problems with the website, but the fact remains that thousands of parents and childcare providers have been adversely affected by these glitches.

‘While we welcome Nicky Morgan’s intervention on this matter, it really is a case of too-little-too-late. Both 30 hours ‘free childcare’ and Tax-Free Childcare were key conservative manifesto promises, which the government seem wholly unprepared to deliver. The very least we expected was investment in an IT system that parents are able to use, and through which childcare providers are able to receive the payments that their businesses rely on.

‘We look forward to hearing the evidence presented to the Treasury Select Committee.’

Purnima Tanuku, chief executive of National Day Nurseries Association (NDNA), said, ‘The response from HMRC to Nicky Morgan has highlighted all the technical difficulties that many parents are facing when they try to access their eligibility codes through this website.

‘The most important aspect of this for parents is that they receive their codes in time for their child to start their funded place from September. No-one who is eligible should lose out on their entitlement. 

‘We are pleased that HMRC is working to resolve these issues swiftly. But the government must also understand that nurseries are spending valuable time and resources trying to resolve these issues for their parents – at a time when the government funding does not even cover their costs of delivering childcare.

‘Not only should parents be compensated for these problems, but nurseries should be fully supported to deliver these hours and paid for their admin time.

‘We urge the Government to make sure the system works for everyone.’

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