According to the Childcare Voucher Providers Association (CVPA), at least 90 per cent of families would be better off using childcare vouchers, which will close to new parents on 4 October, or a combination of tax credits and childcare vouchers, than the Government’s Tax-Free Childcare (TFC) scheme. Parents cannot claim tax credits and use TFC at the same time.
The CVPA figures show that two parent families spending the average household expenditure of £3,780 a year on childcare, would be better off using childcare vouchers than Tax-Free Childcare.
For example, a two-parent household with both parents employed and one child, earning the average income before tax of £46,400 and spending the average household expenditure on childcare, would receive £1,206 of support through childcare vouchers compared to £756 with Tax-Free Childcare (TFC).
Even when doubling the amount of money spent on childcare, the research finds that families would be better off with vouchers.
A two-parent household with both parents employed and two children, earning the average income before tax and spending twice the average household expenditure on childcare, £7,560, would receive £1,866 of support through childcare vouchers, compared to £1,512 with TFC.
The figures for national average spend on childcare are taken from the Department for Education’s Childcare and Early Years Survey 2017. They are based on families with children up to the age of 15. They take into account the universal 15 hours, but not the 30 hours of funded childcare.
Average income figures are taken from the Office of National Statistics' (ONS) data.
Similarly, single parents spending the average household expenditure of £2,362 on childcare a year would be better off with childcare vouchers, according to the CVPA.
It claims that a single parent household with one child, earning the average income before tax of £23,200 and spending the average household expenditure on childcare for single parents of £2,362 would receive £757 of support through childcare vouchers, compared to £472 with TFC.
All two-parent households where one parent works would be better off on childcare vouchers because they are not eligible for TFC. TFC is open to families where everyone in the household works.
With the support of charities, third sector organisations, parents, employers and childcare providers, the CVPA has launched a new campaign to #SaveChildcareVouchers. Through the campaign it wants to encourage parents that will be affected by the closure of the voucher scheme to new entrants in October to lobby their MPs, urging them to call on the Government to keep childcare vouchers open to all alongside Tax Free Childcare.
The Treasury extended the date that the childcare voucher scheme would close to new parents by six months to October earlier in the year, following a petition urging a re-think of the closure of the scheme.
Jacquie Mills, chair of the Childcare Voucher Providers Association (CVPA), said, 'Thousands of working parents – including parents to be – are set to lose out on vital childcare support after 4th October.
'Parents value flexibility and choice when it comes to paying for childcare. With the summer holidays around the corner, we’re urging everyone to join the campaign to #SaveChildcareVouchers. We want all working parents to have access to the same financial support towards the cost of childcare.'
A Treasury Spokesperson said, 'Tax-Free Childcare is fairer as all households who are eligible can access support, regardless of who their employer is or whether they are self-employed
'It will cut hundreds of pounds from childcare bills and is good news for working parents.
'And it supports eligible parents with their childcare costs up to the age of 12.
'By 2019/2020 we will be spending more than any previous Government on childcare support, around £6bn.'
- For more information on the campaign click here