Data reveals parents ‘failing to make use of Tax-Free Childcare’

According to data published by the government, its Tax-Free Childcare (TFC) scheme ‘has not had the uptake expected’, with only 22% of eligible families making use of it.

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Official figures have suggested that the government had planned and budgeted for 415,000 families to be using the TFC scheme by October 2017. However, the data has revealed that, by December 2018, only 91,000 families had signed up to the scheme.

The TFC initiative replaced the Employer Supported Childcare (ESC) scheme, which closed to new entrants on 4 October 2018. TFC is available to both employed and self-employed individuals, and is paid per child rather than per parent, allowing single parents to benefit.

Under the initiative, tax relief of up to 20% is available for childcare costs, up to a total of £10,000. The scheme is therefore worth a maximum of £2,000 per child (£4,000 for a disabled child). Children aged under 12 are eligible for the scheme, as well as disabled children aged up to 17.

Previously, the full roll-out of the TFC scheme was delayed as a result of technical difficulties with the government’s Childcare Choices website. These glitches may have contributed to the low uptake of the scheme, the government stated.

Julia Waltham, Head of Policy and Campaigns at non-profit organisation Working Families, said: ‘The reason for the low take-up of TFC could be because parents have chosen to stick with ESC vouchers, and we know from our own research that working parents are increasingly reliant on informal childcare support from family, often grandparents.’

The Childcare Choices website can be accessed here.

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Report reveals childcare fees have ‘risen faster than wages’

According to a report published by the Trades Union Congress (TUC), childcare fees have risen by 52% since 2008, while wages have risen by just 17%.

The TUC described the situation as being ‘even worse’ for lone parents, and stated that childcare costs for single parents working full-time have risen ‘seven times faster’ than earnings.

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In England, average childcare fees have risen from £159 per week in 2008 to £236 per week in 2018 for a child aged under two; and from £149 per week in 2008 to £232 a week in 2018 for a child aged over two.

Despite government support, including free nursery hours for some working parents and the introduction of the Tax-Free Childcare (TFC) initiative, many families in the UK are ‘still being left with huge childcare bills’, according to the TUC.

It has urged the government to supply additional support, including subsidised, affordable childcare ‘as soon as maternity leave finishes’, and more government funding to enable local authorities to provide nurseries and childcare.

TUC General Secretary, Frances O’Grady, said: ‘Despite government support, families still face eye-watering nursery bills. Britain’s cost of living crisis is having a huge impact on working mums and dads.’

Report suggests summer childcare costs have risen significantly

A report published by the Family and Childcare Trust has revealed that summer childcare costs in England have risen by 5% since last year.

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Working parents now pay an average of £125 for one week of holiday childcare, the report found.

The research also suggested that parents pay an average of £748 per child for six weeks of holiday childcare.

Holiday childcare costs in Wales, however, have fallen by 5%, to £117. Holiday childcare costs in Scotland are on par with those in England.

The Family and Childcare Trust is calling on the government to create a strategy to ensure that ‘every parent is better off working after they have paid for childcare’, and to provide enough childcare for working parents throughout the year.

Ellen Broomé, Chief Executive of the Family and Childcare Trust, said: ‘Once again, rising holiday childcare costs and increasing shortages will leave parents struggling to keep their heads above water.

‘Many working parents who cannot call on family and friends to provide informal childcare may struggle to make work pay or remain in work at all this summer.’

Government launches Tax-Free Childcare scheme

The government has launched its Tax-Free Childcare scheme, which is designed to help parents with the cost of childcare.

Under the new initiative, tax relief worth 20% is available for use against the costs of childcare, up to a total of £10,000. The scheme is therefore worth up to £2,000 per child, or £4,000 for a disabled child.

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Tax-Free Childcare applies to children aged under 12, or up to 17 for those with disabilities.

Parents are able to create online accounts, into which they can contribute money to pay for childcare. By the end of the year, eligible parents will be able to receive government ‘top ups’ of £2 for every £8 that a parent pays into the account.

Commenting on the Tax-Free Childcare initiative, David Gauke, Chief Secretary to the Treasury, said: ‘This government is on the side of working families and our childcare support will cut thousands of pounds off bills for millions of households, as well as supporting parents to return to or remain in work.

‘The new Childcare Choices website provides busy families with options that suit their needs, so they can clearly see which childcare offer works best for them.’

The Childcare Choices website can be found here.

In addition to Tax-Free Childcare, from September, working parents of three and four-year-olds living in England will be able to apply for 30 hours of free childcare, worth around £5,000 per child.

Businesses risk losing key staff due to ‘high cost of childcare’

Businesses risk losing key employees due to the ‘high cost of childcare’, the British Chambers of Commerce (BCC) has warned.

In a study of more than 1,600 business leaders carried out by the BCC and Middlesex University, over a quarter of firms said staff had reduced their working hours as a result of childcare costs.

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One in 10 said workers had actually quit the workplace because of the issue.

Of those leaders surveyed, some 33% claimed the availability of childcare was ‘a key issue in recruiting and retaining staff.’

Three and four-year-olds are currently entitled to 15 hours of free childcare per week, although this is set to be doubled to 30 hours from April 2017.

The move has been welcomed by many firms, with 39% of businesses saying the increased entitlement will have a positive impact on their ability to recruit staff.

However, the BCC is urging the government to take further action and consider introducing a universal childcare entitlement for every child up until they start school.

Commenting on the findings, BCC Director General, Adam Marshall, said: ‘Firms across the UK are losing talented staff, often because of the availability and high cost of childcare.

‘At a time when economic growth is softening, and skills gaps and recruitment difficulties are hindering businesses, the government should consider the childcare system as part of Britain’s core business infrastructure – in the same way that it thinks of energy, transport, or broadband.’

He added: ‘As businesses have evolved to become more flexible, government policy should also evolve – to help as many working parents as possible stay in the workplace’.

Plans to extend free childcare are brought forward

04 Jun 2015

The Government has brought forward its plans to double free childcare for working parents, with the scheme due to begin rolling out to parts of the country in September 2016, a year earlier than originally planned.

Under the new Childcare Bill, eligible families where both parents or a lone parent are in work will benefit from up to 30 hours of free childcare for 3 and 4 years olds during term-time.

The average funding rates paid to childcare providers are also set to increase, with a review planned to begin by the summer.

The changes are expected to benefit up to 600,000 families, resulting in total childcare cost savings for parents of around £5,000 a year.

The British Chambers of Commerce (BCC) has welcomed the news. John Longworth, BCC Director General, commented, ‘Expanded access to childcare is a win-win for employers and parents alike, enabling more talented individuals, should they wish, to stay in work. However, in funding this, we hope the Government move towards a cost effective method of supporting working parents through a fiscally neutral Childcare Contribution Scheme instead of previous commitments to raid pensions savings’.

‘Extend free childcare and cut NICs’, urges CBI

12 Nov 2014

Free childcare should be extended and employee national insurance contributions (NICs) should be cut, according to the Confederation of British Industry (CBI).

At the CBI’s annual conference, the business organisation has called on the Government to extend the existing childcare provision to apply to all one and two-year-olds, a move which it says is ‘affordable’ and would offer additional support to working families.

The CBI has suggested that paid maternity leave should also be extended from 39 to 52 weeks, at which point free childcare would then be available under its proposed measures.

The business group is also proposing that the threshold for paying employee NICs should be increased to £10,500 by 2020, in a bid to improve living standards for those on lower incomes.

In addition to these more immediate issues, CBI director-general John Cridland also highlighted the longer-term issues facing the UK, and called for greater investment in productivity, skills and education.

‘Higher productivity leads to better wages, so we must have a laser-like focus on boosting firms’ competitiveness. We also need to create better ladders to higher-skilled, higher-paid work and improve our education system for all, to overcome disadvantage. Business leaders need to step up to the plate, as well as politicians,’ he said.