CHILDCARE REFORMS ANNOUNCED TODAY.

18 March 2014

SUPPORT FOR PARENTS AT RISK THROUGH GOVERNMENT’S FLAGSHIP CHILDCARE REFORMS

Speaking in reaction to the Government’s announcement today that it will create a dysfunctional monopoly market for the delivery of its new tax-free childcare scheme by autumn 2015, chair of the Childcare Voucher Providers Association (CVPA) Fiona Shields said:

“There is a very real risk that the Government’s reforms to childcare support for working families will lead to increased complexity and cost, create uncertainty and remove choice.

In turning its back on organisations that are successfully delivering childcare support to working parents across the country, the Government is risking the delivery of its tax-free childcare scheme.

 

We are concerned that parents will lose out on much-needed support promised to them by Government, at a time when childcare costs are exceeding annual mortgage repayments for hard-pressed families.”

The CVPA’s initial concerns are:

The Government intends to award a contract to a single organisation that has no track record of delivering vital childcare support to working parents. This puts the delivery of the coalition’s flagship tax-free childcare reforms at risk of delay, error and fraud.

The Government is turning its back on a diverse and successful childcare voucher market that they have recognised delivers innovation and a high standard of service to parents, employers and carers.

  • The Government’s reforms will completely remove any element of choice within the system, removing any incentive to run an efficient and effective service that provides flexibility to meet the specific needs of working parents. Furthermore, in opting to establish a new bureaucratic system, the Government risks jettisoning the simplicity and usability that parents enjoy under the current scheme.

 

  • Instead of using pre-existing and proven infrastructure, the Government’s decision will require new systems to be built from scratch, at great complexity and a potentially huge cost to the taxpayer. This places at risk the Government’s commitment to delivering the scheme by autumn 2015.

 

  • The complex interplay between the new tax-free childcare scheme, the existing childcare voucher scheme, and universal credit creates greater confusion, increasing the risk of mis-payment, leakage and inefficiency within the system.

 

  • The removal of the employer role from the scheme undermines existing engagement from businesses in proactively assisting their staff to return to, or remain in, work.

 

  • This proposed model will create heightened uncertainty for childminders and nurseries, as 25 per cent of all funding to the childcare sector currently comes through the existing childcare voucher scheme. The coalition’s reforms place a vital source of funding to the sector at risk, threatening the viability of many childcare providers.

 

  • The coalition’s reforms stand in contrast to stated Government policy to support SMEs at a time of economic uncertainty through providing greater access to public sector procurement. We are particularly concerned that the decision to award the contract to National Savings & Investment was taken with minimal transparency and scant regard for acceptable standards of public procurement processes.

ENDS

Notes

  • The Childcare Voucher Providers Association (CVPA) is the industry body representing the childcare voucher provider companies. It works to ensure parents, employers and childcare providers receive the highest standards of service.
  • Members of the CVPA will be available for further media comment in response to the Government’s announcement.
  • Further information about the CVPA can be found here
  • Childcare vouchers, which typically operate as a salary-sacrifice employee benefit, allow parents to sacrifice up to £55 per week (for basic rate taxpayers), towards their childcare costs. Through the exemption of income tax and National Insurance Contributions, the scheme providers the average family with savings of at least £1,800 per annum towards their childcare costs.
  • Childcare vouchers are used by over 500,000 working parents, with over 50,000 employers offering the scheme to their staff. The scheme provides critical support to working families and is seen as an important recruitment and retention tool by employers.
  • The Tax-free Childcare scheme will replace the existing childcare vouchers scheme. To be eligible under the new scheme both parents must be in work.

 

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