Parliamentary Debate on the future of Childcare Vouchers

Background

Employers For Childcare has been lobbying Government for Childcare Vouchers to be kept open to new entrants beyond April 2018 so that new parents, or those who change jobs or whose circumstances change, can continue having the option of benefitting from the scheme. This is critical, as 66% of callers to our Family Benefits Advice Service are better off on Childcare Vouchers or Tax Credits than Tax-Free Childcare.

A Petition calling on the Government to keep Childcare Vouchers open to new entrants received over 116,000 signatures from across the UK. As a result, a Parliamentary Debate on the future of Childcare Vouchers took place on Monday 15 January 2018 during which MPs raised concerns to Government.

Debate Summary

The debate was attended by MPs from the Labour Party, Liberal Democrats and Democratic Unionist Party each of whom put strong arguments to the Economic Secretary to the Treasury, John Glen, who responded on behalf of the Government. You can watch the debate here, or read the transcript here.

Overall, it was argued that, although neither Childcare Vouchers nor Tax-Free Childcare are perfect, and some families will benefit more from one scheme than the other, it does not make sense for the Government to close Childcare Vouchers to new entrants. Rather, both schemes should be kept open as part of a comprehensive package of support for families, giving them a choice about what is the best option for them and allowing time for issues with the schemes to be addressed.

Many MPs stressed the importance of ensuring access to affordable, good quality childcare in lifting families out of poverty, enabling parents to undertake training, or to enter and stay in the workforce, advancing economic development and productivity, and improving educational outcomes for children.

Key arguments:

• Impact on low and medium-income families or where only one parent is in work: all MPs highlighted that these parents can benefit from accessing Childcare Vouchers alongside other forms of support including Tax Credits and Universal Credit whereas this is not possible with Tax-Free Childcare. Tax-Free Childcare provides the greatest benefits to families who can afford to spend the most on childcare. Making reference to rising levels of child poverty and in-work poverty, MPs argued that the Childcare Voucher scheme will assist in addressing these issues by enabling families to access the support that best suits their needs.
• Supporting women to access and stay in work: several MPs referred to the importance of adequate financial support for childcare with caring responsibilities critically impacting disproportionately on women and causing many to decide to opt for part-time work or to leave the workforce entirely for a period of time.
• Technical issues with Tax-Free Childcare: cited as having caused parents considerable stress and anxiety, and resulted in many parents losing out financially.
• Employer-employee relationship: a number of MPs argued that Childcare Vouchers allow for a discussion to take place between the employer and employee about the needs of the specific family, and cultivate a relationship between employer and staff as well as contributing to a family friendly ethos within the workplace.
• Take-up of Tax-Free Childcare being disproportionally low: compared to the 780,000 parents claiming support through Childcare Vouchers, and well behind figures estimated previously by the Office for Budget responsibility, MPs highlighted that this could be attributed to many parents choosing to remain in the scheme that offers them more support, or that has a more proven track record of reliability. In particular, there were concerns that the parents of disabled children may be considerably under-claiming with the Tax-Free Childcare scheme. Even though Tax-Free Childcare has been fully rolled out for disabled children, there are currently only 1,187 Tax Free-Childcare accounts registered.
• Difference in age eligibility criteria: several MPs noted Childcare Vouchers can be used for childcare for children up to age 15, while Tax-Free Childcare is only available up to age 11, saying that Government was ignoring the needs of many working families who require childcare for older children and the many education and social mobility benefits that this provides.

The response by John Glen, Economic Secretary to the Treasury, was brief, setting out the Government’s position, and did not counter many of the key arguments raised by the MPs during the debate. The Debate closed with MP Catherine McKinnell, who led the Debate, calling on the Minister and the Government to listen to the arguments put forward and to keep Childcare Vouchers open to new entrants, alongside Tax-Free Childcare.

Employers For Childcare has been campaigning for Childcare Vouchers to be kept open alongside Tax-Free Childcare so that parents can continue to access the option that is best for them. We would like to thank all of the parents and employers who have shared information with us, and allowed us to champion their voices. We were delighted that MPs Emma Little Pengelly (DUP) and Anneliese Dodds (Labour) referred, in the Debate, to information provided by us.

What happens next?

We will continue to lobby for Childcare Vouchers to be kept open to new entrants beyond April 2018. There is still a window of opportunity to keep the scheme open to new entrants, but that time is diminishing. We will be monitoring this closely, and will be posting updates on our website, social media, and through our newsletters. We will also be asking MPs to write to the Treasury again setting out the arguments summarised above.

An Early-Day Motion (EDM) has also been tabled by the MP Caroline Lucas calling for Childcare Vouchers to be kept open alongside Tax-Free Childcare. Further information is available here. EDMs are formal motions submitted for debate in the House of Commons. While few are actually debated, they allow MPs to draw attention to important causes. MPs register their support by signing individual motions. We will ask MPs to sign this important motion and would welcome your support on this. You can contact your MP by following these simple steps:

1. Click on theyworkforyou.com and enter your post code to find your local MP.
2. Click on your MP’s name to see their voting record.
3. Click on the “send a message” button near the top left of the page.
4. Ask your MP to support the Early-Day Motion and make your voice heard.

In the meantime, working parents who wish to join the Childcare Voucher scheme need to do so as soon as possible. Parents can do this by making a salary sacrifice from their pay prior to the closure date – no later than March 2018. If you have any friends, family or colleagues who might benefit, including new parents or those on maternity or shared parental leave, make sure they know now.

Remember that if you have any questions about what your family may be entitled to, you can call our Family Benefits Advice Service on 028 9267 8200 or email hello@employersforchildcare.org for free, impartial and confidential advice. Working parents who received a personal benefits check from us last year gained an average of £4,130.

We are also taking part in a webinar on 22 January to explain the implications for employers. The webinar is being hosted by Legal-Island. More details and a link to register for the webinar can be found on our website:  Webinar – The Future of Childcare Vouchers.