I met with Planet Wavertree chief executive Clare Roberts in Parliament this week at the All-Party Parliamentary Group on Childcare and Early Education. It is clear that government promises to properly fund the expansion of childcare for working parents is failing, and putting providers under real pressure.
The government refuses to meet the full costs for small providers who face significant administration and other overheads, which reduces choice for parents.
More problems are on the horizon.
The existing Childcare Voucher scheme is due to close to new entrants on October 4. Thanks to pressure from parents, providers and MPs the government was forced to put off the scheme’s closure by six months.
Over two million families have benefitted from childcare vouchers since their introduction under the last Labour government in 2005.
The government’s new Tax-Free Childcare scheme will leave some families worse off, depending on a family’s individual circumstances. In March, the House of Commons Treasury Committee published a report which stated that while childcare vouchers could provide income tax and National Insurance relief worth up to £2,860 per parent, Tax-Free Childcare only provides £2 for every £8, up to a limit of £500 every three months. That’s £2,000 per year. The report also identified that with a take-up rate 90 per cent lower than initially expected, Tax-Free Childcare was clearly under-performing.
The six month extension was also a recognition of some of the problems with Tax-Free Childcare that have left many parents without access to essential financial support.
As I heard from providers this week, the childcare system is complex and chronically underfunded. The cost of childcare has risen by between 32 per cent and 47 per cent across England since 2010, while wages have only risen by around 16 per cent.
The government should abandon plans to phase out childcare vouchers for working parents from October.
I strongly support investment in childcare and believe there should be an extension of properly funded 30 hours of free childcare to all two, three and four year olds to give every child the best start in life.