Childcare vouchers myth-busting and why it's time to sign the petition
Sign the petition to Keep Childcare Vouchers open beyond April 2018
Childcare vouchers are the most popular employee benefit after company pensions. Employers must set up their schemes now if they want to ensure that their employees can sign up and benefit from Childcare Vouchers before it closes to new joiners.
A petition was started to keep childcare vouchers open and if you have signed it or were to visit the petition page now, you will also have seen that the Government has responded. However, in doing so it has pitched TFC against childcare vouchers rather than seeing that both can run together as the petition called for. This would best achieve the Government's objectives of supporting working families.
The Government's response also seems to have omitted a number of key facts about both tax-free childcare and childcare vouchers. It is vital that these are understood so parents can see why it is so important to keep both schemes open. So, we have set about answering some of the most common myths and are also calling on organisations to sign the petition.
Sign the Petition to Keep Childcare Vouchers Open
Myth 1: Isn't Tax Free-Childcare fairer?
It has been said that Tax-Free Childcare is somehow "fairer" than Childcare Vouchers, but this argument doesn't stack up. There are instances where unexpected changes in circumstances would result in families losing all support under TFC where they would still receive some support under vouchers. For example, if one parent was not in work for any reason - this could be an unexpected job loss or having to stop working to look after an elderly relative.
Childcare Vouchers are also designed to support those on lower pay the most. A family with two standard rate tax payers can claim £1,866 while a family with two higher rate tax payers can claim up to £1,250. TFC is linked to expenditure, meaning that only those who can afford to spend £8,000 per child on childcare each year will benefit from the headline £2,000 of support.
This is an important factor because it means that more money from general taxation is spent in the richest regions of the UK rather than the poorest regions. In fact, it is expected that the average family in London will get almost three times as much support as those in north east England (one of the poorest regions).
As you can see, the issue of "fairness" is far from clear cut. The concept is so subjective that we prefer not to use it at all. But if we were to assign fairness we would say that a regime that offered both Tax Free Childcare and Childcare Vouchers was the most fair. It would allow parents to access the support that worked best for them and their families.
Myth 2: Won't eligible families be able to claim more?
According to the Government's own figures, the average family spends £3,276 on childcare each year. This family would only receive up to £655 of support under TFC but could receive up to £1,866 with Childcare Vouchers.
It is also important to acknowledge that anyone who claimed TFC would lose access to any other working tax credits and universal credit.
Myth 3: Aren't only a minority able to access Childcare Vouchers?
It is often quoted that only a minority of employers offer the scheme and so implied that only a minority of workers would have access. But this is very heavily skewed by the fact that a minority of employers employ the vast majority of the workforce so well over 20 million of the 31 million employed in the UK have access to Childcare Vouchers. That includes every large employer, every public sector organisation, every Government department, and the majority of medium sized companies.
Over 1000 small and medium sized companies register to be able to offer Childcare Voucher schemes every month. In fact one of the key reasons for many small companies not setting up a Childcare Voucher scheme is that they don't employ any parents! So yes, a minority of employers offer Childcare Vouchers but the vast majority of employees have access to it.
It is also said that self-employed parents are unable to access Childcare Vouchers and yes this is true for self-employed people that do not work under their own registered company, but it is only because the Government has refused to allow self-employed parents to access Childcare Vouchers. This is despite us spending a great deal of time and effort campaigning for this access. However, this is the situation we are in and is one of the reasons why we want to keep both schemes open.
Hopefully you'll be able to see why we think it is so important that we keep Childcare Vouchers open. If you do, we would implore you to sign and share the below petition. If it reaches 100,000 signatories it will be considered for parliamentary debate, and we think there's a real chance of keeping it open and ensuring that parents can access the financial support that best suits their individual family needs.
Sign the Petition to Keep Childcare Vouchers Open
Derrick Hardman is chief operating officer at Edenred UK.
This article was provided by Edenred UK.
In partnership with Edenred
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