• Home /
  • News / Lucy warns of chaos and delays to Tax-free childcare, after the Government botches its consultation

Lucy warns of chaos and delays to Tax-free childcare, after the Government botches its consultation

IMG_8770b_recropped2.jpg.ashx.jpgLucy warns of chaos and delays to Tax-free childcare, after the Government botches its consultation

• The Government’s tax-free childcare plans are in ‘chaos’ after the Government botched its consultation on how the scheme would be delivered. The scheme is now already 6 months behind schedule.

• Last week Ministers snuck out a second consultation on the delivery of tax-free childcare after they failed to include key details on how it would be delivered in its original consultation on the scheme.

• Now, with just over a year to go until its roll out, no decisions have been taken over how tax-free childcare will be delivered – this consultation is likely to delay the scheme even more.

Labour’s Shadow Minister for Childcare and Children Lucy Powell MP said:

“This is becoming another Universal-Credit style shambles from David Cameron. Incompetent Ministers have botched their tax-free childcare consultation, leaving the scheme in chaos and delivery in doubt. Whilst families facing a cost-of-living crisis continue to struggle with soaring childcare costs now, this Government has absolutely no plan to help families with childcare before the next election.

“Labour knows that increased that help with childcare is good for the economy and for families. That is why we will extend free childcare for three and four year olds with parents in work from 15 to 25 hours and introduce a primary childcare guarantee to help parents manage the logistical nightmare of before and after school care – in addition to tax-free childcare.”

Ends

Notes to editors

• In the original consultation last year, the Government announced they would deliver tax-free childcare through voucher accounts administered by private sector voucher providers:

“The Government intends to deliver Tax-Free Childcare through voucher accounts administered by private sector voucher providers.” p43
HM Treasury, Tax Free Childcare Consultation on Design and Delivery, p. 43, August 2013, https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/226460/tax-free_childcare_consultation_on_design_and_operation.pdf

• In March they U-turned on this decision and announced that HM Revenue and Customs with National Savings and Investments would deliver the scheme instead:

“Delivered by HM Revenue and Customs (HMRC) with its delivery partner National Savings & Investments (NS&I), the scheme will be will be simple, flexible and straightforward for parents and childcare providers; parents’ money will be secure; and they will face no fees or charges.”
Nicky Morgan MP, then Economic Secretary to the Treasury, 18th March 2014,
http://www.publications.parliament.uk/pa/cm201314/cmhansrd/cm140318/wmstext/140318m0001.htm

• However, they had failed to include this Government-run option in the original consultation:

“The previous consultation also considered how to provide childcare accounts – the vehicle by which parents and government contribute funds toward qualifying childcare. It set out different market structures for private sector provision of accounts. The government is now consulting on options to deliver Tax-Free Childcare accounts itself, through National Savings and Investments (NS&I), or within HM Revenue and Customs (HMRC).”
HM Treasury, Tax-Free Childcare: consultation on childcare account provision, 23rd May 2014, p. 3-4, https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/313878/PU1667_Tax-Free_Childcare__consultation_on_childcare_account_provision.pdf

• Now in the face of a legal challenge from childcare voucher companies, the Government have been forced to re-open its consultation on the delivery of tax-free childcare:

“The Treasury has launched a further five-week consultation on Tax-Free Childcare in the face of a legal challenge from childcare voucher companies.”
Nursery World, 28 May 2014, http://www.nurseryworld.co.uk/nursery-world/news/1144325/treasury-seeks-views-run-tax-free-childcare

• This means that with just over a year to go until its roll out, no decisions have been taken over how the scheme will be delivered:

“The government will consider responses to this consultation alongside the responses to the first consultation before it makes its final decision on the provision of childcare accounts.”
HM Treasury, Tax-Free Childcare: consultation on childcare account provision, 23rd May 2014, p. 3-4, https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/313878/PU1667_Tax-Free_Childcare__consultation_on_childcare_account_provision.pdf

• In the original timetable for the delivery of tax-free childcare detailed proposals for how the scheme would operate were due in Autumn last year - this means the Government are already 6 months behind schedule, with the re-opened consultation likely to cause further delays:

table.jpg

HM Treasury, Tax Free Childcare Consultation on Design and Delivery, p. 8, August 2013, https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/226460/tax-free_childcare_consultation_on_design_and_operation.pdf

• Labour supports any new help for parents with the cost of childcare. Under this Government, childcare costs have risen 30% since 2010 , whilst wages have fallen by £1,600.

• But tax-free childcare won’t come in until Autumn 2015 at the earliest. Just one in five families will receive help through tax-free childcare.

• Labour’s plans to extend free childcare from 15 to 25 hours per week for working families with three and four year olds are in addition to tax-free childcare.

Do you like this post?

The Labour Party will place cookies on your computer to help us make this website better.

Please read this to review the updates about which cookies we use and what information we collect on our site.

To find out more about these cookies, see our privacy notice. Use of this site confirms your acceptance of these cookies.