Childcare is a crucial issue for many families in the UK. For a large majority, their decision to work is dependent on the availability of good quality, local, and crucially, affordable childcare. But for many families, the numbers just do not add up. Family and Childcare Trust’s Childcare Survey 2018, published in February, found that the cost of a typical part-time nursery place for a child under two has risen by 7% since 2017, to £122 per week.
Childcare vouchers make a huge difference to many working families, as basic-rate taxpayers can save just over £930 a year. Crucially, they are offered by employers. Our research shows that almost half (47%) of working parents are not confident asking their employer about placing boundaries on work or reducing working time; childcare vouchers act as a catalyst for a conversation with their employer about family friendly working practices. For employers, vouchers help demonstrate their commitment to supporting family-friendly working practices.
Unlike vouchers, parents need to administer the government’s new Tax-Free Childcare system themselves. While there are undoubtedly winners under the new system, not least among the self-employed, there are far too many working parents that will lose out financially if childcare vouchers are abolished.
Essentially, Tax-Free Childcare subsidises parents according to their childcare spend. The more you spend, the more you save. Childcare vouchers, by contrast, allow basic-rate taxpaying parents to salary sacrifice the most, and thus save the most.
Analysis by the Childcare Voucher Providers Association has identified that all working families spending the national average on childcare will lose out. Because Tax-Free Childcare requires all parents in a household to be in work, all couple families with one working parent will lose out. These are huge swathes of working parents, not the small numbers you might expect to fall through the cracks when a new system is introduced.
The government’s decision to close the scheme in autumn is disappointing, and difficult to understand. Working Families is calling for childcare vouchers to remain open, running alongside Tax-Free Childcare, to allow parents the maximum amount of choice and enable them to choose the scheme that offers them the most support and that helps them balance work and caring for their children in the way that works best for their families.
Theresa May stood on the steps of Downing Street in 2016 pledging to support the UK’s just about managing working families. Why would the government, in this instance, not want a situation where there are no losers, only winners?
Julia Waltham is head of policy and communications at Working Families