Tuesday, 7 August 2012

Never a Better Time to Introduce a Childcare Voucher Scheme

Family finances are under more pressure now than in the last nine years. Recent figures from the Office for National Statistics show that people had less disposable income after tax in the first quarter of 2012 than at any other time since 2003. Due to the recession, many businesses have had to take steps such as freezing pay and families have suffered from rising prices, particularly for expenses such as childcare.

At the same time the Department for Education has released figures showing that due to rises in the birth rate since 2010, numbers of children in maintained nursery and state-funded primary schools started increasing in 2010 and are projected to continue to rise. By 2020, numbers are forecast to be 18% higher than in 2012, reaching levels last seen in the 1970s. The total headcount of pupils aged under 5 in maintained nursery and state-funded schools is projected to reach a peak of 1.08 million in 2019, a 13% change on 2012. This rise does not take into account the numbers in privately run childcare.

With disposable income falling and the birth rate rising, businesses need to look at ways of rewarding staff whose incomes have effectively dropped and ensure they encourage skilled workers who have become parents back into work.

Childcare vouchers are the perfect way to achieve this. Parents can join a childcare voucher scheme, offered through their employer, to exchange part of their salary for childcare vouchers.  Savings are made as vouchers are non-taxable and National Insurance exempt. Childcare voucher users can currently save up to £933 per year. As well as helping parents to return to work by making childcare more affordable, working parents feel more valued and are able to make work pay. Businesses retain and attract trained staff and also benefit financially. If an employee takes the full amount of vouchers (currently £55 per week or £243 per month), a business can save over £400 per year per employee in employer National Insurance contributions.

What’s more, a campaign is underway which will help to address the issues of decreasing income and increasing numbers of parents in the workforce. The amount a parent can sacrifice from their salary in exchange for childcare vouchers has not changed since 2006 and so childcare vouchers have effectively been devalued.  Busy Bees Benefits’ ‘Mind the Gap – Raise the Cap’ campaign aims to persuade the Government to increase the weekly limit from £55 to £75. Raising the cap will increase the annual savings a parent can make by more than £300. The benefits for businesses will rise to a maximum saving of almost £550 per employee per year. At the centre of the campaign is an e-petition which has already attracted nearly 13,000 signatures. The aim is to get the cap increased in line with the 2013 Budget.

John Woodward, MD of Busy Bees Benefits said: “There are so many reasons for businesses to offer a childcare voucher scheme, it’s hard to believe there are so many businesses that still don’t have one. It’s quick and easy to set up, improves the morale and the pockets of working parents and saves employers money both directly and indirectly - from tax on salaries and by improving staff morale and retention. Our campaign aims to preserve the value of this benefit to help make childcare more affordable for working parents.” 

No comments:

Post a comment