Tax-free Childcare scheme: raise the cap now and ensure funding keeps pace with rising costs
Responsible department: Her Majesty's Treasury
The proposed Tax-free Childcare scheme is welcome as it will provide support to working parents to help them pay for registered childcare.
Under the new scheme, working parents will pay 80% of their childcare bill; the government will contribute the remaining 20% and this will apply to childcare costs of up to £6,000.
The current average cost of childcare is circa £7,500 per year*, therefore the £6,000 capped limit is already out of date.
It will take over two years to implement the new scheme and by this time the gap between the £6,000 capped amount and the average cost of childcare will have widened further.
Childcare costs rise each year in line with staff costs. Therefore, in order to preserve the value of the Tax-free Childcare scheme, there should be a commitment from Government to review and increase the cap annually in line with the annual increases to minimum wage.
*Figures derived from Laing & Buisson Children’s Nurseries UK Market Report 2012
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