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Childcare vouchers
16/11/2009
Children and Early Years Minister Adam Ingram has called on the UK Government to reverse its decision to withdraw tax and National Insurance benefits linked to childcare vouchers, warning of its impact on families.
He has written to Prime Minister Gordon Brown to express the Scottish Government's opposition to the move, make clear that he was given no prior warning that changes were being considered, and to ask for clarification on what proportion of the savings made will be allocated to Scotland, after Mr Brown said the money would support expansion of free pre-school places for vulnerable two-year olds in England.
In his letter Mr Ingram said:
"I would like to lend the Scottish Government's weight to the opposition to this move. Encouraging parents to work, with the reassurance that they can access high quality childcare, must also be in our mutual interests in respect of steering the nation out of the current recession."
Although the tax incentives are to be phased out over a number of years, the Minister expressed concern about the message being sent to families and employers about the importance of affordable and accessible childcare.
Mr Ingram said:
"I note that employers will still be able to provide childcare vouchers after the current tax and NI benefits are phased out. I am not convinced, however, that employers and, indeed, parents will find this an attractive option without incentives from government.
"I hope that, in view of the many representations you are receiving, you will reconsider your current proposals to phase out current incentives around childcare vouchers."
The Minister added that the Scottish Government had recently concluded an exercise and report, shared with Whitehall officials, on promoting the value of childcare vouchers and been successful in raising awareness and the profile of this valuable means of encouraging parents to return or stay in work and to support the provision of high quality services.
Childcare vouchers allow employers to support their staff with the costs of childcare. Since 2005 the UK Government has allowed income tax and National Insurance (NI) exemptions for participating employees (up to a maximum of £1,196 a year per parent) and NI exemptions for employers (up to £370 a year per participating employee), provided certain conditions are met.