Iain McMath is a Member of the Childcare Voucher Providers Association

Childcare has become a hugely prominent issue in British politics. All parties, across all nations in the United Kingdom, are looking to parents to provide much-needed votes. Indeed, getting childcare support right could be enough to win some key marginal seats. 

 The aim of all parties is the ‘holy trinity’ of the early years – high quality, affordable and accessible childcare. As part of the coalition government’s response to this challenge, a new scheme of childcare support, Tax-free Childcare will be introduced from autumn next year. The headlines have been good, but the reality is looking far more questionable - parents, childcare providers and the taxpayer are all in danger of losing out significantly under Tax-free Childcare.

Firstly, let’s start with the most crucial of these groups – the parents. Depending on how much they spend on childcare costs, parents will be able to save up to £2,000 a year per child through Tax-free Childcare. However, this will require the parent’s childcare fees to be extraordinarily high at £10,000 a year, double the average spend of £5,030. What we have then, is a scheme that involves the development of a costly new IT system at the expense of the taxpayer, which will mostly be helping those families who can already afford the most expensive form of childcare.

Unless, of course, the family has one parent not working. This would remove your eligibility for Tax-free Childcare, regardless of whether the unemployed parent is looking for a job or in further education.

 Along with parents, Tax-free Childcare will have significant implications for childcare providers. Nurseries and childminders have grown accustomed to receiving funds promptly and directly through the current childcare voucher scheme. This will be threatened under Tax-free Childcare. The design of the new system, with parents paying into an account and then the government topping it up, will create significant delays. This gets worse when you consider the complexity of the IT system that will be needed to operate the scheme, and governments’ track record in delivering such projects.

 Finally, Tax-free Childcare will be hugely costly. The question is, is it the best use of taxpayers’ money? Government could make a number of straightforward changes to the existing childcare voucher scheme, which would have achieved all the stated objectives of Tax-free Childcare. The support could have been extended to the self-employed; the value of the vouchers could have been increased; and a right-to-request could have been introduced to increase access to the scheme. These changes would have been simple, speedy and inexpensive for the taxpayer.

 There are still a lot of questions to be answered with regards to Tax-free Childcare – not least whether Government will be able to develop the systems in the timeframe they have promised. But we do have some certainties. Many parents will not get the support they expect from Tax-free Childcare. Childcare providers will be left waiting for delayed payments to reach them. All this, while the taxpayer forks out significant funds for a scheme that is unnecessary and poorly targeted.