adoptionThe government has promised to create a "better" childcare system for parents, by allowing them to claim back up to £1,200 a year in costs per child from 2015.

The UK has some of the highest childcare costs in the world, and 4Children CEO Anne Longfield believes the announcement will come as "welcome news" for many parents, but that those families under extreme pressure will be concerned they have to wait two-and-a-half years to see the changes take effect.

Though it is still to undergo consultation, the scheme is expected to work as follows:
- Parents will be able to open an online voucher account with a voucher provider and have their payments topped up by government.
- For every 80p families pay in, the government will put in 20p up to the annual limit on costs for each child of £1,200.
- Parents will be able to use the vouchers for any Ofsted regulated childcare in England and the equivalent bodies in Scotland, Wales and Northern Ireland.

The scheme is expected to benefit more than 2.5 million families though it will initially only be open to pay for children under five.

Commenting on the announcement, 4Children CEO Longfield said: "The expansion of childcare vouchers to parents whose employers don’t currently take part in the scheme is hugely positive.  However, it appears that whilst under current rules both parents can claim vouchers, in the new system the voucher will only be available to one earner. 

"Increased support for some of the lowest income families – up from 70% of childcare costs to 85% – will make a big difference and will mean that these families will get more of the money they earn as long as they reach the threshold for paying income tax.  It is a missed opportunity, however, that this is not being extended to some of the lowest paid workers – earning less than £10,000 per year.

"Overall, these are welcome announcements but families who are feeling extreme pressure on their family budgets today, will regret that they will have to wait at least two and a half years to benefit from them.  With the cost of childcare rising by around 5% a year there will be some tough times ahead before 2015/16 when this extra money comes on stream."

Half of the funding for the £1.4bn scheme would come from the abolition of the previous system of childcare vouchers, and in part by funding switched from elsewhere in Whitehall.

Under the current employer-supported childcare voucher scheme, parents can receive vouchers for childcare worth up to £55 a week. This sum is deducted from their salary before tax is paid. The saving in tax and national insurance is typically worth about £900 a year for a basic-rate taxpayer. Where both parents work, families can save about £1,800 a year.

Children's minister Elizabeth Truss said the problem of affordability went "right up the income scale" and the new scheme would provide "choice".

"This is about giving parents choice," she explained. "At the moment a lot of parents can't go out to work because the cost of childcare is prohibitive."

"What we are recognising is that where families are earning between £20,000 and £40,000 a year, [they feel] it's not worth going to work because of the cost of childcare. What we need to recognise is that this new voucher system is much better than its predecessor. Now working families can access it."

The announcement comes ahead of the Chancellor's Budget speech tomorrow, we will have coverage of the key announcements affecting children and families on our website and via @journalfhc on Twitter.

Posted 19/03/2013 by richard.hook@pavpub.com