· 2 min read · Features

Labour Party Conference: childcare vouchers announcement is a body blow to hard-working families


Gordon Brown's speech to the Labour Party Conference last Tuesday seems to have been overshadowed by the almost simultaneous announcement from The Sun that it will be backing David Cameron's Conservatives in the next election. HR magazine's political correspondent Marc Woolfson reports.

The news will have come as an unpleasant shock to the prime minister, who would have been hoping this year's conference would provide a badly-needed morale boost leading into a sustained election campaign over the next seven months. 

However, as disturbing as The Sun's decision is for Labour, the prime minister needs to look closer to home for the source of popular outrage and widespread discontent with his policies. 

A major problem is the lack of consistency in the messages he, and his colleagues, put across. A pertinent example is the frankly ludicrous decision to scrap the tax relief for childcare vouchers in order to fund 10 hours per week of free childcare for 250,000 two-year olds from lower-income families. 

The announcement flies directly in the face of the messages the No 10 spin machine had been actively delivering in advance of the speech. Supposedly, Labour's election strategy is to appeal to the ‘squeezed middle': hard working families on moderate incomes who feel let down and abandoned by Labour but who have not yet totally bought into the Cameron ‘project'. This makes sense, as it is well-known that elections are won and lost on the middle ground - floating voters were the key to former prime minister Tony Blair's three election victories - and policies designed to appeal to the family vote will play a significant role in this campaign.

Free childcare for poorer families is without doubt a good idea, but funding it by taking support away from families on moderate incomes makes no sense politically. The vouchers are used by upwards of 330,000 parents, 60% of whom are basic rate taxpayers, according to HMRC research. 

With two parents claiming vouchers, families would benefit from a saving of between £1,800 and £2,400 per year. With the average yearly cost of childcare now at approximately £8,500, losing this support could mean an increase of over 20% in an average family's childcare costs. With many families already struggling with the impact of recession - for which many will blame Brown's policies as chancellor - this is a further attack many hard-working families will be unwilling to accept, and therefore hundreds of thousands of votes are at risk.

The news has been greeted with dismay and shock from across the HR and childcare sectors, with the work-life balance charity Working Families stating: ‘The Government appears to be sending parents mixed messages - encouraging more parents into work but withdrawing a source of support in work by way of vouchers.'

The National Day Nurseries Association asserted that ‘it is essential that funding this [extension of free childcare to two-year olds] does not come at the expense of support for families more widely by making cuts to employer supported childcare. Whilst more help is welcomed this must not impact on those families who rely on existing support to afford the cost of childcare'.

The Federation of Small Businesses argued that childcare vouchers are ‘vital to small businesses that can't otherwise help subsidise childcare without incurring financial penalties. If the Government is serious about addressing equality and the gender pay gap it won't stop this vital scheme'.

As details of the policy emerge, opposition is growing. A petition has been launched on the No 10 website (http://petitions.number10.gov.uk/keepvouchers/) and a blog established for people to express their thoughts on the proposed change (http://www.vouchersblog.co.uk).  At the time of writing the petition had attracted over 4000 signatories in just three days. 

With the family vote still up for grabs, this political miscalculation might yet come back to haunt the prime minister.

Marc Woolfson is an account director at Westminster Advisers.