The Treasury committee is challenging the government’s decision to close the existing employer-led childcare voucher scheme in October without conducting a review of the impact on families who will then be required to move to the new online tax free childcare (TFC) system
In its report on childcare published in March the committee made a number of recommendations, including keeping the childcare voucher scheme open until winners and losers of discontinuing it are known.
It says it is disappointed in the government’s response, which states that it will not be carrying out a review of TFC until two years after its implementation.
In its response to the childcare the government stated: ‘Analysis of the impact of tax-free childcare on working parents will need to take place once the scheme has had time to bed in, parental awareness has increased, and families have had more time to understand the support they can receive under the scheme.’
In a letter to the Treasury, Nicky Morgan, chair of the select committee, stated: ‘By carrying out a post-implementation review of TFC two years after its commencement, the government will be ending childcare vouchers-a scheme that has been extremely popular with working families-without seeking to understand what the consequences will be.
‘As was evident from the 2017-18 HMRC Supplementary Estimate, and the OBR's November 2017 Economic and Fiscal Forecast, the uptake of TFC has been 90% lower than the Government had expected.’
Morgan said the committee wanted the government to commit to publishing an analysis of the take-up of TFC compared to the continued use of childcare vouchers during the first year of the scheme-and the subsequent impact on households-prior to making a decision on whether to discontinue vouchers in October 2018.
Catherine McKinnell, a member of the Treasury committee, said: ‘The childcare voucher scheme offers savings per parent, whereas TFC offers savings per child. Replacing the former with the latter will result in winners and losers, but it’s not clear if the government knows who will be affected and how.
‘Until the government has properly scrutinised the effects of scrapping vouchers in favour of TFC, both schemes should remain open.’
The government response to the Treasury committee childcare report is here.
Nicky Morgan’s letter to the chief secretary of the Treasury is here.
Report by Pat Sweet
