Charities and Not-for-Profit Plus Blog
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Childcare vouchers
At the recent Labour Party Conference, Gordon Brown proposed the removal of tax and NIC relief for employer based childcare vouchers, saying that the current scheme is badly targeted and that the middle classes benefit more than others. The proposal was to switch the current scheme to one that provides 10 hours of free childcare a week for 250,000 two year olds by 2015. The recent proposal, with regards to childcare vouchers, refers to two separate changes, at different dates.
1. March 2011: Parents who are not already receiving vouchers from their employer at that time would not be able to join a scheme
2. 31st March 2015 the Government’s proposal is tax and NI exemption would be removed completely.When the scheme was first set up first set up 20 years ago it recognised the prohibitive cost of childcare and was a way to support parents to be able to afford to go to work. The proposal to remove the vouchers, which are thought to save parents up to £2,400 a year on childcare, has had an adverse reaction from the public. Over 33,000 employers have now adopted the scheme and many parents have found it to be the only way that they could consider returning to work. According to research by a leading voucher provider, it has shown that the vouchers are a key support to over 340,000 parents and around 57% of the parents that use the scheme say they would not be able to afford their existing childcare arrangements if they did not receive the tax break on the vouchers.
Several former ministers have also spoken out and written to Downing Street, raising the point that going forward with this recent proposal would remove “effective and popular childcare support from hard-working parents”. They have also said that the plans to cut childcare vouchers are “greatly unfair’’ and ‘’mark the undoing of one of Labour’s landmark achievements”. The ministers’ overall message has been that ‘’surely this is not the time to be removing key support schemes from hard-working families when they need to be at their most engaged to help recover from the recession’’.
More than 75,000 people have now signed a petition opposing the removal of the scheme on the Downing Street website criticising the Prime Minister’s proposal and urging him to reconsider.
Downing Street is now said to be ‘listening’ to warnings from the public and have said they will look at the criticisms very carefully. More information is expected in the pre-budget report which is being held on the 9th December.
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