Clarity on the Government’s response to the Childcare Voucher petition

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It has been said that Tax-Free Childcare (TFC) is fairer and better targeted than vouchers, but this doesn’t take into account that families would lose all support under TFC 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. With childcare vouchers, the family would still receive support where they wouldn’t with TFC via the other working parent. If the childcare vouchers scheme closes to new entrants as planned, then even existing users would lose access if they ever changed employer.

The average family will be able to claim more support with childcare vouchers. TFC is often said to offer £2,000 of support, but this is based on a family spending a total of £10,000 a year on childcare, with £8,000 out of their own pocket. Most families cannot afford this. In fact, according to the Government’s 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, and these other benefits would still be available to a family using childcare vouchers.

It is also sometimes claimed that TFC is “fairer” to single parents, but single parent households could still be worse off with TFC. A basic rate taxpayer single parent would have to spend over £4,665 on childcare to be better off with TFC than with childcare vouchers. It is precisely instances like this that shows us the importance of keeping both schemes open.

People sometimes think childcare vouchers has restricted access, but the fact that you are receiving this email means that you are probably one of the well over 20 million employees of the 31 million in this country that can access vouchers. This includes everyone who works for any public sector body and any large employer. And this number is growing by the day. Even with the threat of closure over 1,000 new small and medium sized businesses sign up to join the childcare voucher scheme every month.

Hopefully you’ll be able to see why we think it is so important that we keep childcare vouchers open.

What is ‘Progress 8’ exactly?

What is ‘Progress 8’ exactly?

If your child is in secondary school, not doubt you’ve heard about the change in how the GSCE results are published this year. For those of you who aren’t sure, we’ve put together some key facts to help you make some sense of it all.

Progress 8 is a new way of measuring secondary school performance, encouraging schools to offer a broad and balanced curriculum in KS4*. The new system will measure the progress of pupils from the end of primary school to the end of secondary school.

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30-hour free childcare – pilot scheme launch

The government is committed to delivering 30 hours of free childcare to hard working parents of three and four year olds by 2017.

From September this year, parents across eight UK councils (Wigan, Staffordshire, Swindon, Portsmouth, Northumberland, York, Newham and Hertfordshire) will pilot the scheme and benefit from extra hours of childcare a year early.

So how will it work?

Currently, three and four year olds (and disadvantaged two year olds) receive 15 hours of free childcare as standard. The additional 15 hours, making it 30 in total, will only be available to families where both parents are employed.

You’ll have to apply for each of the 15 hours separately. The existing 15 hours will be supplied by your local authority and childcare provider, as normal.  Applications for the additional 15 hours will go through a new system being developed by HMRC.

We look forward to seeing the results of the pilot scheme and will keep you updated as things develop.

Childcare vouchers may help parents manage benefits change

Parents who are high-earners may be able to reduce the potential loss to their child benefit by making the most of salary sacrifice schemes such as childcare vouchers. Featured in a number of national newspapers in recent days, accountants and tax experts have re-enforced how using the childcare voucher scheme could help certain parents manage the effects of planned changes to the child benefit system.

From 7 January 2013 changes to the benefit system will see families where at least one partner earns £50,000 or more having their child benefit reduced, while those earning £60,000 or more will lose the benefit all together.

As the benefit is calculated on taxable rather than gross income, increasing pension contributions and making the most of salary sacrifice schemes such as childcare vouchers may help to reduce the level of taxable pay.

For some working parents, making the most of childcare voucher schemes could impact on the threshold they fall into and thereby increase the amount of child benefit to which they are entitled.

If you are a working parent and would like more information about childcare vouchers, then please visit our website or call the CVS team on 0845 002 1111.

 

The information and opinions expressed within this blog are for information purposes only. They are not intended to constitute legal, taxation or other professional advice, and should not be relied on or treated as a substitute for specific advice relevant to particular circumstances.

Think tank warns it doesn’t pay to work

A report by a leading think tank has warned that 'extortionate' childcare costs could mean some parents are actually left worse off going to work than they would be staying at home. The report, produced by the Centre for Social Justice, has warned that the Government must tackle the high cost of childcare or it will fail to make it economically worthwhile for parents in low paid jobs to be in work.  In some cases, it may even work out cheaper for the Government if certain parents remain at home.

The think tank looked at the situation parents are facing, including the planned introduction of a Universal Credit scheme. The scheme is part of a major overhaul of the benefits system and will aim to simplify the way the system works.

The think tank has concluded that even under the new scheme, parents in low income jobs with more than two children could be worse off working.

However, on reading this report, it has come to light that the think tank has not considered factors such as the free early years entitlement, which provides for 15 hours free childcare a week for all three and four year olds (for 38 weeks a year), so that a parent working 20 hours a week would only have to fund the additional five hours childcare (of which 70% would be subsidised under Universal Credit).

Whilst the robustness of the report may be questioned, it does demonstrate that childcare continues to be a highly topical issue for the Government and one that they are being called upon to address, including areas such as the amount of red tape faced by childcare providers. It is thought that this will help reduce costs that have to be passed on to parents.

At CVS, we fully support working parents and the need for quality childcare provision at an affordable cost. As this report suggests, reducing red tape is one way to do this. We have also made other recommendations to the Government’s Childcare Commission, including suggestions to remove the restriction around the National Minimum Wage  and for changes to the way wrap-around care is provided (perhaps with a relaxation of ratios for care outside of the core nursery hours) and we will keep you updated with any news on this.

Childcare vouchers can help many parents, particularly when you consider that basic rate tax payers can claim vouchers up to the value of £243 a month, so working parents can make potential savings of £933 per parent a year on childcare costs.

Around half a million working parents currently rely on childcare vouchers each month to meet their childcare costs, with the vast majority of these being basic rate tax-payers.  We fervently hope that the Government continues to provide this greatly needed subsidy to normal working parents, who aren’t all higher earners, as the report by the Centre for Social Justice wrongly suggests.

We will continue to lobby the Government with our fellow Childcare Voucher Providers Association members, to ensure that the needs of all working parents are considered and that childcare costs are made more affordable, without reducing the quality of the childcare they receive.

Government makes moves to tackle childcare costs

Good news for parents - more help could soon be on the way for families to help them manage the spiralling cost of childcare. Prime Minister David Cameron has recently announced that he intends to set up a new commission that will focus on childcare and work with parents and providers to try and find ways to make childcare more affordable.

As well as looking at ways to reduce the cost of childcare, the commission will look for inspiration from international childcare models and also consider ways to increase places and “wrap-around care” for children over-five, during holidays and out-of-school hours.

The Daycare Trust has revealed in its annual ‘Childcare costs survey 2012’ that working parents are now paying, on average, £15,000 per year for childcare - more than a third of their income - and with little financial help.

According to the Trust, the high cost of childcare is forcing many parents to consider sacrificing work in order to care for their children, whilst living off national benefits.

Here at CVS we think the introduction of the commission is a very positive step by the Government. There is an obvious need to balance the need for quality childcare with affordability and it will be interesting to see what conclusions the commission arrives at.

Times are very tough for many UK families, especially in the current climate and it’s great that the Government is starting to address some of these issues.

We have long been campaigning for addition support to be made available for working parents, such as by increasing the tax-free limits on childcare vouchers in line with increasing childcare costs or by making the vouchers scheme available to the self-employed, so they too can benefit from the savings.

We hope that these measures may now be seriously considered, as they could make a huge difference for so many parents.

If you’re a parent or childcare provider and would like more information about childcare vouchers, then you can find more details on our website www.computersharevoucherservices.com or on our interactive Facebook page www.facebook.com/computersharevoucherservices.