27 Jun 2014, Katy Morton
A survey carried out by the Childcare Voucher Providers Association (CVPA) reveals that many providers have serious concerns about the impact of Tax-Free Childcare if the Government goes ahead with plans to run it through a single, public sector organisation.
Tax Free Childcare will be introduced in autumn 2015 and provide support of up to £2,000 a year for each child. Working families who earn less than £150,000 a year will be eligible.
The current childcare voucher scheme will be phased out and closed to new entrants when it is introduced.
The Government had initially planned for National Savings and Investments (NS&I) to deliver the Tax-Free Childcare accounts, however a legal challenge from childcare voucher companies led the Treasury to launch a five-week consultation on its delivery in May.
Two public sector organisations, National Savings and Investments (NS&I) and HM Revenue and Customs (HMRC), are under consideration to deliver the scheme, along with private operators.
To better understand the concerns of childcare providers about the introduction of Tax-Free Childcare, the CVPA surveyed over 900 nurseries and childminders.
It found that two-thirds of childcare providers would prefer Tax-Free Childcare to be run by a private operator, while only 10 per cent would prefer the scheme to be run by the NS&I or HMRC.
The reasons providers gave for this option was because they felt they would be more likely to receive payments on time from an existing childcare voucher provider.
More than half of respondents thought there would be an increased risk of payment failure if Tax-Free Childcare is delivered through a single private operator.
According to the CVPA, over half of childcare providers told them they receive more than 20 per cent of their fees through the current childcare voucher scheme, a figure that the association says is likely to be mirrored, if not increased, under Tax-Free Childcare.
The survey also revealed that seven out of ten respondents believe childcare voucher companies would provide better and more responsive support than a public sector operator.
A further seven out of ten providers said they disagreed with the assertion that childcare costs are pushed up as a result of having multiple providers of childcare vouchers.
Fiona Shields, chair of the Childcare Voucher Providers Association (CVPA), said, ‘Our survey shows the importance of designing Tax-free Childcare in a way that works for everyone – including childcare providers.
'Childcare vouchers represent a significant proportion of the revenue accrued by providers, and this will no doubt continue under Tax-free Childcare. Ministers should note the serious concerns expressed by nurseries and childminders; concerns that must not be ignored when deciding how the scheme is to be delivered.
‘The CVPA looks forward to continuing to engage with Government during this crucial period.’