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

govt.jpg

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.

Families seek out charity shop treasures

It appears thrifty parents may be saving their pennies by heading to the local charity shop in search of those hidden treasures. In an interesting article appearing in the Daily Telegraph it’s been revealed that with budgets squeezed for many, a quarter of families may now be turning to charity shops for items such as clothing and toys.

The story centres on a recent survey of parents, which has shown one in five are buying birthday gifts for other children from charity, while nearly a quarter plan to buy their Christmas gifts from a charity shop this year.

While it may not be every family’s cup of tea, giving a new home to a pre-loved or unwanted item can be an affordable way to find a bargain, while at the same time giving money to a good cause.

As the cost of living continues to rise, putting increasing pressure on family budgets, cutting costs in innovative ways such as this will no doubt remain a top priority for many parents.

Indeed, we hear from parents who are being affected by escalating costs and for whom the savings they receive through their childcare vouchers are vital.

Whether putting them towards the cost of nursery care, breakfast and after school clubs, au pairs or any other kind of registered childcare, the savings can prove essential for families.

We think this story may hit a nerve with many parents and so we’d love to hear your thoughts on it. If you have any other great cost-saving tips or ideas of your own, then we’d also love to hear them.

You can also check you’re getting the most from your childcare vouchers, the savings they can bring and more details about what they can be used for on our website.

Daycare Trust research shows 6% increase in nursery costs

Daycare Trust’s Childcare Costs Survey 2012 was released today. The research, sponsored by Computershare Voucher Services, shows that:

  • hourly childcare costs for a child under two have increased by 5.8%; and 
  • costs for a child aged two and over have risen by 3.9%.

In the same year period, wages have only increased by 0.3%.

Daycare Trust’s research coincides with new HMRC figures which reveal that 44,000 fewer families are receiving help with childcare costs as a result of the Government’s cut to financial support in April 2011. This saw the childcare element of Working Tax Credit cut from 80% of costs to 70% - as a result, the average claim has fallen by more than £10 per week, costing low-income working families who receive it more than £500 per year.  

The survey, conducted between November 2011 and January 2012, asked all Family Information Services in Britain about the cost and availability of childcare in their area. Other key stats revealed that:

  • the average hourly childcare costs now exceed £100 for 25 hours in many parts of Britain
  • the average yearly cost for a child under two is £5,103.
  • Britain’s most expensive nursery recorded this year charged £300 for 25 hours care – £15,000 for the year.
  • Over half of local authorities said that parents had reported a lack of childcare in the last year.

Anand Shukla, Chief Executive of Daycare Trust said: “These above-inflation increases in the cost of childcare are more bad news for families, heaping further pressure on their stretched budgets as wages remain stagnant and less help is available through tax credits.

“Daycare Trust warned that the Government’s decision to cut tax credits would mean that some families found that they were no longer better off going to work once they had paid for childcare. The latest HMRC figures reinforce Daycare Trust’s fear that the loss of this vital lifeline is forcing families out of work and in to poverty.

“Today we are calling on the Government to reverse its self-defeating childcare tax credit cut, and to deal decisively with the childcare affordability crisis for parents by pledging to provide free childcare for all two year-olds by the end of the current parliament.

Daycare Trust’s survey highlights the ever growing gap between working parents and affordable childcare.

Employers can do their bit to support employees by making flexible working a reality and introducing childcare voucher schemes. Schemes are cost neutral for companies to run and allow a basic rate earner to save nearly £1000 per year on their childcare costs.

Computershare Voucher Services fully supports Daycare Trust’s recommendations for improving accessibility to affordable childcare. We have been particularly heavily involved in the plan to extend childcare vouchers to self-employed and encourage entrepreneurship; a proposal that has already seen some Government support.

There have been several articles covering the report which you can read here:

Childcare cost rises 'may make parents quit their jobs' – BBC News

Childcare costs rise by nearly 6% - The Guardian

Childcare costs survey: nursery fees rise by 6 per cent in a year – Nursery World

Vouchers for the self-employed model gains support from MPs

Pushing to extend childcare vouchers to the self-employed has been on our agenda for several years now and support for the idea is really gaining traction. CVS – together with the other leading providers Edenred, Sodexo and Grass Roots – has been working for several months to put together a model that is workable, easy to implement and will ensure self-employed parents reap the same benefits as other working parents.

I had the honour of presenting our model to the Conservative Women's Forum at the House of Commons last Thursday and they’re keen to back the plans.

The model will allow self-employed parents to claim tax and National Insurance back at the end of the financial year – providers will be required to issue them with a certificate, detailing their childcare voucher spend for that year.

It’s piqued George Osbourn’s interest as well and made the pages of the Independent on Sunday this weekend. You can read the full article here, including a quote from me:

Tax break to encourage 'mumpreneurs' to start their own businesses

I’m delighted that we’ve put together a strong model which is being supported by such an influential group. Extending childcare vouchers to the self-employed supports the ethos of ‘Start-up Britain’ and will allow self-employed parents to enjoy the same £933 saving per annum as basic rate employees.

Of course, we’re not resting on our laurels now and will continue to support this model and work tirelessly to ensure vouchers for the self-employed become a reality.

Parents set to pay more for their childcare

Research published today by the Social Market Foundation shows that as a result of growing childcare costs and reduced Government support, working parents are set to pay more from their own pockets to cover childcare costs. The research is supported by The Childcare Voucher Providers Association (CVPA), of which CVS is a founder member.

Key findings show that:

  • Low income families in 2015 are likely to pay £600 per year more for their childcare compared to 2006 – almost 7% of their annual income:
  • a middle-income family in 2015 is likely to pay £900 per year more; and
  • a higher-income family in 2015 is likely to pay £1,400 per year more.
  • If childcare costs continue to rise at the current rate, the cost of a typical amount of childcare will be £104 per week in today’s money; a 13.5% rise from 2006.

Ultimately, this means that if we’re to return to the public support levels offered in 2006, the high point for childcare support, the following measures need to be taken:

  • The proportion of childcare costs covered in the new Universal Credit would have to increase to 83% (from the current 70%)
  • The childcare voucher entitlement for basic rate tax payers would need to increase to £83 per week – it’s currently £55 per week, which has remained unchanged since 2006.

The report clearly demonstrates the consequences if funding continues to drop whilst costs rise. As part of the CVPA we’re committed to promoting the role childcare vouchers can play in offsetting the costs parents are faced with - it’s not just childcare they have to pay for after all and easing that burden will help elsewhere and hopefully help them return to work.

The report will be formally launched today where the SMF will present their findings to members of parliament and civil servants in order to raise awareness of the issues and highlight potential solutions. 

I’ll be at the event to represent the CVPA and give the introduction to the session. I’m looking forward to being able to talk about the relevance of childcare vouchers in helping parents meet their childcare demands and how we move forward to ensure parents are not simply priced out of childcare.

You can read the SMF’s report ‘The Parent Trap’ here.

Parents refuse to scrimp on Christmas

With soaring inflation and utility bills you may think Christmas cheer would be the last thing on parents' minds, but it seems spending on presents for the kids is one thing Mums and Dads are just not willing to compromise on. We asked over 1000 parents how much they plan to spend on presents for their children this Christmas and found that despite increasing financial pressures, 16% expected to spend over £300 in total on their kids’ presents this year. A further 19% said they’d shell out between £200-£300 and 5% are planning to spend over £500!

Christmas can be tough on the family bank balance, but even when budgets are squeezed parents still want to provide all they can for their children, the important thing is not to be left having to pay the price for Christmases past.

I read a recent survey by HSBC which showed 21% of parents will be borrowing money to pay for presents, while others will be relying on their overdraft, payday loans, personal loans and borrowing from friends and family.

If you’re a parent, then make sure you're making the most of all financial schemes and benefits you are entitled to, such as childcare vouchers, which can save a huge amount to be able to add to the Christmas present fund. If you’d like more information on childcare vouchers and the savings you can make, visit our website.

Also, consider other ways you can make savings this time of year. We’ve put together some simple ideas of fun ways for families to save some pennies and have a ‘home-made’ Christmas this year.

CVS’ tips for ‘making’ this Christmas the best ever:

Spending less can often mean giving more, especially when it comes to presents for relatives such as grandparents. Here are some ideas for ‘making’ Christmas:

• Get handy - Handmade Christmas cards are fun and easy to make, highly personal and will always be well received. One idea to try with the children is to create a design using an upside down hand print to become Santa’s face and beard. Stick on eyes and add rosy cheeks to bring extra charm to the design.

• Get cooking - Stained glass window biscuits make a beautiful and edible Christmas tree decoration. Use seasonal biscuit cutters to create trees, stars, bells and present shaped biscuits then cut out an identical shape in the centre of each biscuit and pop in a boiled sweet before putting in the oven. Remember to make a small hole at the top of each biscuit so you can thread ribbon through for hanging, then bake and decorate with icing.

• Get foraging - Pinecones can make a festive and charming decoration. They are versatile and can be painted and hung on the tree or around the home. Place in silver bowls/cups/candlesticks and top with glitter covered cardboard stars as tabletops; or even use them to decorate the cheese board and fruit bowl.

• Get snappy – Collect together photographs from Christmases past and from members of the family. See how far back you can go by involving grandparents, and see what precious stories and anecdotes can be uncovered along the way. Copy the images and use them to make unique place settings or gift tags.