The government has announced changes to financial support for working parents who use registered childcare. The new scheme, available from Autumn 2015, will mean funding is offered to households where both parents work and to single parents who work. It will be allocated per child. The funding will eventually replace the current childcare voucher scheme, which will continue to be open to new joiners for a period of 5 years. During that time parents will have the option to choose the scheme which best suits them.
The new Tax-free childcare scheme will be based on a subsidised model and will be offered via Childcare Voucher companies such as Busy Bees Benefits which already operate the current childcare voucher scheme. Under the new scheme it will be up to individual parents to choose their voucher provider. Given this change, childcare providers will no doubt find themselves playing a greater role in advising parents about the financial support available to make their childcare more affordable.
The new scheme will not only increase the financial support for many parents and thus increase occupancy, it will simplify the payments system to childcare providers, with the government funding (20% of the bill up to a maximum of £6,000 per year) providing savings of up to £1,200 per child.
JohnWoodward, MD of Busy Bees Benefits said:
“BusyBees Benefits welcomes the principle of this proposal as it will be simpler for parents and childcare providers to understand and access. As a childcare voucher provider with many years’ experience in the sector, Busy Bees Benefits is well placed to offer the new funding scheme. We will make it as easy as possible for parents and carers. We introduced childcare vouchers to 100,000 parents and became the leading provider. We will do the same with the subsidy scheme, ensuring as many parents as possible make use of their entitlement and that they are allocated the correct amount of funding. We will provide a service for everyone.”
Whilst the childcare voucher scheme is a popular and effective way to support working parents, it is clear that rising childcare costs, the fact that employers are not obliged to offer a scheme, and that those who are self employed or on very low pay cannot benefit from the savings, means that change is now necessary. One of the shortcomings of the current childcare voucher system is the fact that it is not index-linked which means that the savings have not changed since 2006.
Busy Bees Benefits recognised the increased squeeze on ordinary working families and has been campaigning for the last year for the maximum amount of pay which a parent can sacrifice from their salary to be increased, working on behalf of parents who have struggled to meet 2012/13 costs with 2006 allowances.
It is estimated that 2.5 million parents will benefit under the new scheme, more than twice as many when compared to childcare vouchers.