Removal of childcare vouchers could undermine employee engagement

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Employers will have less opportunity to support working parents under the new Tax Free Childcare scheme
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The Tax-Free Childcare scheme could prevent employers talking to staff about childcare needs

Employee engagement could be affected by the closure of the childcare voucher scheme, Working Families and the Childcare Voucher Providers Association (CVPA) have warned.

In a joint report, The future of childcare support for working parents, both bodies criticised government plans to remove the childcare voucher scheme, describing it as a “central plank in the benefits packages that many employers offer”. Working Families and the CVPA are calling on the government to keep childcare vouchers available alongside the incoming Tax-Free Childcare (TFC) scheme.

Childcare vouchers are currently distributed through employers. Under TFC parents will have to set up accounts themselves and top them up online. The report claims that cutting employers out of the process removes an opportunity to discuss childcare needs with staff.

Sarah Jackson, chief executive of Working Families, said: “Employees consistently place a premium on employers who understand and support their childcare needs; vouchers are an important mechanism for this discussion to take place. There’s no reason why the creation of the new Tax-Free Childcare scheme has to bring vouchers to an end.”

The report estimates that there are 780,000 parents using childcare vouchers through employers. More than 60,000 businesses across the UK offer childcare vouchers to employees, suggesting employer involvement has allowed many workers to easily access the scheme.

Working Families and the CVPA say that TFC will prevent businesses from offering the same level of support to staff. Previous research by Working Families and Bright Horizons revealed that workers who felt supported by their employers were likely to be 43% more productive.

The organisations have also criticised the potential financial impact of scrapping childcare vouchers on working families. The government is offering a 20p top up on every 80p deposited into a childcare account (up to a maximum of £2,000). But the report estimates that a family would need to spend £10,000 per year on childcare to receive the maximum benefit.

“The headline figure of £2,000 looks generous but many parents will get far less in reality,” said Jacquie Mills, chair of the CVPA.

Working Families and the CVPA have called on the government to keep the childcare voucher scheme open alongside TFC. Mills said: “Let families see which scheme they would be better off with and let them make a choice.”

The childcare voucher scheme will close in April 2018.
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