Tuesday, 17 November 2009

Childcare vouchers: keep them or lose them?

Childcare is giving me sleepless day, er nights. Once again. This time it's nothing to do with me or Cubling, well, at least not directly, but the issue is all the more important.

The Labour government, in an attempt to encourage mums to work (and I won't go into the pros and cons of that, but check out Being a Mummy for some useful insights), introduced tax credits and childcare vouchers to ease the burden of childcare. There's also some half measure of free childcare which is rather useless and doesn't really ease the financial cost of having kids while also working.

Now, the government is proposing to phase out childcare vouchers. I take issue with this. While I understand the spirit of it, I still don't think it's a good idea as the proposal stands. Here's the problem: There is actually a significant gap in support for childcare costs. In the case of a two parent family, if one partner works and the other is in training or education that does not qualify for Educational Maintenance Allowance, the couple cannot claim for working parent tax credits. Both parents have to be in work to claim working parents tax credits. I am in such a situation, unable to claim the childcare element of working parents tax credits because my other half is in postgraduate education. So while only I can only take advantage of the tax relief through childcare vouchers (if two parents are employed, the advantage is doubled to 100 pounds a month), it is still so much better than nothing (i.e. the amount I can claim through the childcare element of working parentstax credit).

Childcare vouchers are therefore the only way of getting some tax relief on the soaring cost of childcare, childcare which in this country is heavily privatised. Just compare the cost: in some countries childcare is free, in others it may put you down between 100 and 200 quid. Here it's at least 600 full time. What do you do if you have to children under 5? Maybe there are people out there with an income that would leave some spare, but surely this is rare.

Granted, most training providers may have some support available. But many don't. So for instance, there's the mum who wants to do an NHS training, her partner is on a very low income but working full time, and the NHS does not provide any support at all to cover her childcare costs. She will not be able to undertake the training, thus limiting her chances of future employment and moving beyond the poverty line. Then there is a young parents who is offered a basic and non-certified course at a college, a course that may re-engage him/her with education and with time lead to him/her undertaking a course leading to a qualification. A parent who, as her/his situation is, is extremely unlikely to become economically active without this access course, but who wants to, and is offered an opportunity to gain new skills and over time, qualifications and the hope of employment. It won't happen because the college cannot offer childcare and without childcare, the parent can't take advantage of the course offered.

Childcare vouchers and childcare support for parents in training are two ways of enabling parents to have choices. I do believe that childcare vouchers for parents on high incomes, especially if they are in the higher rate tax bracket, are unnecessary. However for those on low and middle incomes, they are more often than not a lifeline.

What's more, the system of available support for childcare is complex and hard to understand. If a child tax credit form does my educated head in, and it takes me a full working day to research support options available to the woman who contacted me (and I have the advantage of being in exactly the same situation as her, so I had some considerable previous knowledge), how hard must it be for the many most in need of support for childcare costs.

Whatever the new proposal is going to be, I'd like to see a shift of focus to ensure those in need of childcare for any form of education, training and employment that is suitable for them to get adequate financial support, and that life choices and chances are not ever determined by the ability to afford childcare or to understand and complete tax credit forms.

PS: Polly Toynbee put it much better than me in the Comment is free section of the Guardian: "But to pay for their (the most deprived two year olds) care by abolishing childcare vouchers (...) would mean that not very well-off mothers would pay to alleviate the plight of toddlers of even worse-off mothers."


Heather said...

the thing about the whole childcare vouchers and tax rebates etc etc that really irks me is how unnecessarily complex it is. It is all very well saying yes you can have this and that if they make it almost impossible to find out about, decide which is the best option and then bog it down in layer upon layer of beaurocracy with forms to be filled in triplicate. Seems, as you say, to defeat the whole point.

Kitschy Coo said...

I agree, the system is totally and unnecessarily complicated. I like to think of myself as a reasonably clever lady but I really struggle to figure out what we're entitled to and the calculation I derive is never the same as what the HMRC grants us. This worked in our favour last year and we were given a substantial payment at the end of the year because we were being underpaid but what if it goes the other way this year and they overpay us and we have to pay them back? It's very stressful.

MrsW said...

In mild defence of Labour and to appease my socialist leanings the childcare element of the old Family Credit was introduced by the Tories in 1994, just in time for my firstborn in 1995, heaven forbid I shouldn't return to work :)

It "sounds" like it was much easier back then however I was a single parent with 2 under 2 from 1996 so they were literally throwing money at me.

I have to admit I am surprised that both parents have to be working 16 hours to qualify for WFTC, I checked and it appear this was also the case with the old Family Credit I just never knew because it didn't apply to me. It's something that needs both highlighting and addressing since 16 hours in education (which is the equivalent of a 60 point Open University course and therefore half-full-time) really ought to be treated the same as 16 hours paid work.

I get heartily sick of hearing about people who not only fail to qualify for support in post-school education, but have to negotiate with their working spouses whether they will or won't pay for them to take a course - I know of some spousal negotiations that are sadly unsuccessful. How much women's autonomy has progressed since the Great War (ahem)

MrsW said...

1918 of course being a turning point in the enfranchisement and independent rights of women throughout Europe (can you tell I've just now read some more of your wonderful blog - digging furiously here! lol!)

Mwa said...

Childcare in the UK is a disgrace. All my friends with children are having a terrible time with it. Over here in Belgium, there are subsidised places which everyone can afford because they are means tested. I think an average family would pay about fifteen euros a day just now. The top limit is under thirty euros a day. When I was studying and my husband was out of work, we paid a euro a day, with one euro fifty for nappies on top. Most women I know are in full time employment because they can afford it. If a government is serious about getting women back to work, they will actually do something about it.

Kat said...

Drives me nuts. Too little importance is put by supporting families and nurturing children in the UK.

Muddling Along Mummy said...

What a great post - childcare vouchers support mothers with children of all ages not just those with 2 year olds. The provision of tax relief on childcare is a problem throughout a child's life not just at the start

Yes please means test it so that the very well off who don't need it don't get it (but please on a current basis, perhaps via tax credits?) - for me the vouchers meant that I worked for cash income not just to cover my childcare costs on a monthly basis

planb said...

I too, agree with everything you've said.... Apart from one bit. Higher rate tax payers really do need them too.

I'm a working mum of three under three. I'm also a higher rate tax payer. After I've paid tax and childcare (including two lots of childcare vouchers) I take home £2.50 an hour. Yes. £2.50. That's significantly less than half the minimum wage.

I live and work in London which probably explains both a) why I'm so well paid and b) why our childcare is so expensive, but even that has been heavily discounted (by £60 per day) by the nursery. I also realise that we're relatively unusual in having 3 pre-school-aged children, but we aren't by any manner of means alone.

Without childcare vouchers I would be very close to earning nothing and it would be very hard to justify continuing to work (I can't say I'm enjoying the constant juggling, and my high blood pressure probably speaks for itself). What use then my education (for a significant part of which the government paid), training and economic contribution I have made both to the organisation for which I work and to the state?

So yes, rant about childcare vouchers and how important they are for those in lower income brackets. But please, for my sake, don't forget that we at the other end of the income scale really do need them too.

ps over from the BMB carnival and delighted to be introduced to a new blog.

cartside said...

Plan B thanks for your really useful comment. It's easy to just use one brush and think anyone on higher tax rate has enough money to pay for the full cost of childcare. With 3 under 5 this is of course not the case. I was actually wondering if the child care voucher amount is doubled with 2 children under 5? I assume not. Again, something that seems unfair.

I only have one under 5. With 2 under 5s, my entire income would go to childcare if it weren't for childcare vouchers. This is just wrong. The system should make sure that no matter how many under 5s anyone has, work still pays off.



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