Government delays changes to childcare vouchers

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The decision to keep the system open for another six months is welcome news to families and employers

The UK government has agreed to delay the changes to the childcare voucher system, following pressure from the Democratic Unionist Party (DUP).

The employer-backed voucher scheme, used by up to 450,000 parents for childcare while they work, was set to close to new entrants in April but has now been extended for a further six months, education secretary Damian Hinds said during a Commons debate yesterday.

This delay in scrapping the scheme comes as the replacement system of tax-free childcare has been plagued by issues.

The current employee scheme allows staff in participating companies to receive vouchers of up to £55 a week in lieu of their salary. In 2013 the government revealed plans to abolish this scheme in favour of one where parents would open an online voucher account and have their payments topped up by the state.

The Labour party widely criticised the move, with DUP MP Emma Little-Pengelly saying yesterday that while the employer-backed scheme is "far from perfect" it had reduced childcare costs for many parents.

Technical issues on the HMRC website have also left many parents unable to access vouchers through the new system.

Little-Pengelly said the DUP is “delighted” with the government’s backpedalling, commenting that: "This period will be used to address concerns raised about the scheme and to look at new provisions to address childcare accessibility and affordability in Northern Ireland and throughout the United Kingdom."

Employment experts have also welcomed the news.

“The decision by parliament to potentially overturn the government’s attempt to abolish childcare vouchers by voting to keep the scheme open for another six months is fantastic news for working parents and employers,” said James Malia, director of employee benefits at childcare vouchers provider Sodexo Engage.

Working parents across the UK rely on employer-supported childcare vouchers to save hundreds, if not thousands of pounds each year on childcare. Sodexo Engage research revealed that 57% of households would have been worse off under the new scheme proposed by the government. However, by having both childcare vouchers and tax-free childcare available parents will be empowered to choose whichever option is best for their families.”

For campaign organisation Working Families it is seen as a “step in the right direction”.

Julia Waltham, head of policy and communications at Working Families, told HR magazine: “Having campaigned for childcare vouchers to remain open alongside tax-free childcare, today’s announcement is a step in the right direction. Parents that work consistently place a premium on employers who understand and support their childcare needs; employer-supported childcare vouchers are an important mechanism for this discussion to take place. Alongside this, some working families will lose out under tax-free childcare compared to what they might get through vouchers.”

She added: “The government must use this period of reflection to determine how to keep employer-supported childcare vouchers open alongside tax-free childcare, creating a support system offering maximum choice to working parents.”

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