Tax-free childcare - early years organisations call for direct funding

The National Day Nurseries Association welcomed the move to extend the benefits of childcare vouchers to more parents, but added that the system must be user-friendly and easy for nurseries to administer.

Chief executive Purnima Tanuku said, ‘We also need to make sure that lower and middle-income families benefit and support is available where it is needed most, including for families in receipt of universal credit.’

‘Parents may be disappointed by the two year wait but it is important that we get the scheme right for parents and childcare providers. We hope that the Government will use this opportunity to consider how early years funding can be reformed to make life easier for parents and childcare providers. We would like to see funding reform which brings together the money for childcare tax credits, childcare vouchers and free nursery entitlement places. A simplified system where all the funding is pooled in an electronic voucher that parents could pay directly to childcare providers would give parents choice and reduce waste and red tape.’

The Daycare Trust and the Family and Parenting Institute said the proposals were ‘a significant move in the right direction’, but also called for funding to go direct to providers.

Chief executive Anand Shukla said that despite the funding childcare costs in the UK remained some of the highest in the world.

‘Investing in a subsidy rather than in bringing the actual cost of provision down may push up childcare prices. We need to ensure that extra financial support doesn’t have an inflationary effect, which would negate the impact of new support. Our preference would be for the Government to invest directly in providers through the free childcare offer and focus resources on improving quality. Parents want affordable, flexible and high quality childcare and the approach the Government has taken is not the most effective way of achieving this.’

‘We are pleased that the Government’s plans aim to create a widely accessible mechanism of support for parents. The focus should be on creating an easily understood and easy to administer scheme of support. It is essential that the threshold for support is set at a higher level than the rate at which child benefit support is being withdrawn.’

He added, ‘The Government has indicated the new support will be limited to families where both parents work, so families with a parent – most often the mother – who stays at home with their children seem to be left out of this support. Working families shouldn’t be penalised because one parent chooses to care for young children.

'These measures also won’t provide any additional support until autumn 2015, which leaves parents facing a long delay before the financial pressure they are facing is eased.’

Mr Shukla also said that the Government needed to do more to help parents with childcare costs for older children, pointing out that the current scheme is available for children up to the September after their 15th birthday.

The new scheme is initially for working parents with pre-school children and will eventually be extended to parents of children under 12.

Neil Leitch, chief executive of the Pre-School Learning Alliance, said, ‘While we would have preferred the Government to have properly funded universal childcare provision for all families, regardless of income, this should eventually be good news for families where both parents are working and for lone-parent families with a working parent.

‘However, it is disappointing that having raised the hopes of thousands of families when the Prime Minister said at the launch of the Childcare Commission last summer that he wanted to improve the affordability and accessibility of childcare for working families, it will be two- and-a-half years before the support makes its way into the pockets of families.’

‘We are also disappointed that the tax breaks are dependent on both parents working and that this does nothing to support those who choose to sacrifice their salary and put their careers on hold to stay at home and look after their children. This flies in the face of pre-Election rhetoric where several MPs spoke of ensuring support for families in this way.

‘This seems to be more about pushing parents back to work rather than providing real childcare choices.’

Deborah Lawson, general secretary of Voice, the union for education professionals, which represents nursery staff and nannies, said, ‘The Government’s childcare policies are like a see-saw – for every move up there is something that brings it back down to earth with a bump.

‘While many parents will be helped by the scheme, it seems that others may lose out. Also, the scheme will not start until 2015 and, it could be argued, doesn’t go far enough in its scope.

‘There is also the issue of places. Will there be enough? Where is the infrastructure and capital investment to meet the potential increase in demand in 2015 added to the places needed for vulnerable two-year-olds? This could lead to further cost increases.

‘Will the Government’s proposed scheme keep up with childcare costs in the future and will it enable the childcare profession to receive better pay and conditions that reflect their skills, knowledge and responsibilities, or will it increase profit margins?’

John Woodward, managing director of Busy Bees Benefits, said he welcomed the principle of this proposal as it would be simpler for parents and childcare providers to understand and access.

‘As a childcare voucher provider with many years’ experience in the sector, Busy Bees Benefits is well placed to offer the new funding scheme. We will make it as easy as possible for parents and carers. We introduced childcare vouchers to 100,000 parents and became the leading provider. We will do the same with the subsidy scheme, ensuring as many parents as possible make use of their entitlement and that they are allocated the correct amount of funding.  We will provide a service for everyone.’

Pete Westall, group general manager for Co-operative Flexible Benefits, which provides childcare vouchers for 15,000 working parents, said, ‘We welcome any support that the Government offers working parents.

'Although the precise changes to childcare are not yet clear we look forward to the opportunity to be involved in the consultation once the details are finalised.’