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Two-thirds of childcare providers fear payment problems in new Tax-Free Childcare scheme

Over two-thirds of nurseries and childminders fear the new Tax-Free Childcare scheme being introduced by the Government will cause an increased risk of delayed payments.

The scheme is being introduced in Autumn 2015 but many childcare providers have raised ‘serious concerns’ over the scheme being run through a single, public sector organisation.

A survey by the Childcare Voucher Providers Association (CVPA) has shown many nurseries and childminders are worried the new scheme could cause an increased risk of payment failure, poorer customer service, and be less responsive than the current employer supported childcare voucher scheme.

The Government had initially planned to operate the Tax-free Childcare scheme through National Savings & Investment (NS&I), however, recently published a consultation on alternative delivery models.

Under the scheme, the Government will top up the account with 20 per cent of childcare costs up to a total of £10,000 - the equivalent of up to £2,000 support per child per year.

Fiona Shields, chair of the CVPA, said: “This survey shows the importance of designing Tax-free Childcare in a way that works for everyone – including childcare providers.

Childcare vouchers represent a significant proportion of the revenue accrued by carers, and this will no doubt continue under Tax-free Childcare. Ministers should note the serious concerns expressed by childcare providers; concerns that must not be ignored when deciding how the scheme is to be delivered.”

She added: “The CVPA looks forward to continuing to engage with Government during this crucial period.”

In the survey, two-thirds of childcare providers said they would prefer Tax-Free Childcare to be run through a model of private sector competition, while only 10 per cent would prefer the scheme to be run by NS&I or HMRC.

Twenty per cent remain ambivalent as to how it is delivered.

Overall, the CVPA found 62 per cent of childcare providers believe they are more likely to receive payments on time from an existing childcare voucher provider than from a public sector provider such as NS&I or HMRC.

Only eight per cent believe timeliness of payments will be better with a public sector provider.

Over half of childcare providers told the CVPA they receive more than 20 per cent of their fees through the current childcare voucher scheme.

The existing employer supported childcare voucher scheme will be slowly phased out as the Government’s gets introduced.

The new scheme will be available for children up to the age of 12.

It will also be available for children with disabilities up to the age of 17, as their childcare costs can stay high throughout their teenage years.

July 2014