Clause 62 - Restrictions on claiming tax exemption for childcare vouchers

Part of Childcare Payments Bill – in a Public Bill Committee at 10:15 am on 28 October 2014.

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Photo of Lucy Powell Lucy Powell Shadow Minister (Education) 10:15, 28 October 2014

New clause 6 is a probing new clause to explore further the impacts of grandfathering employer-supported child care on two issues that we heard about during our oral evidence sessions. The first is about family-friendly business practices in companies who support employees through the employer-supported child care scheme. The second is about whether those people who would be better off staying in the ESC scheme—single-earner households and others—will find that, over time, they cannot do that because their scheme is being phased out. We want to know what the Government intend to do about that.

As we have discussed previously, the so-called tax-free child care scheme is in many ways a superior version of the employer-supported child care scheme. It will certainly be available to many more people—the self-employed in particular, which is to be welcomed. However, as we heard in the oral evidence sessions, there are concerns about what role employers will continue to have in family-friendly business practices, because the current scheme enables them to have broader conversations with their employees. The Government have committed to

“explore how employers could play a role in Tax-Free Childcare if they wish to do so.”

Will the Minister expand on how she sees that happening?

The intention of the Bill is to give many more families the benefits of employer-supported child care, which is why we are talking about the new proposals. However, there are some families who are not going to be eligible  for tax-free child care, but are currently eligible for employer-supported child care. Other families are better off staying in the employer-supported child care scheme than moving to tax-free child care.

Some employers will stop offering the employer-supported child care because of demand. What assessment have the Government made of the impact of that on those families? Has the Minister considered that? Those are the main issues around grandfathering the employer voucher schemes.