Many local parents have expressed anger and shock at Government plans to scrap tax relief on childcare vouchers.
Gordon Brown announced recently that he will axe childcare vouchers, with which employees can pay up to £55 per week of childcare costs out of their gross income, to make way for more help for poorer families.
Providers have warned that while it is admirable to focus attention on the most vulnerable members of society, taking away this tax credit from the people who are needed to revitalise the economy will do more harm than good.
Iain McMath, managing director of childcare voucher provider Sodexo, says: “It is ridiculous to impact in this way on hundreds of thousands of working parents who rely on vouchers – 70pc of people who claim vouchers pay basic-rate tax, so it is not a luxury benefit.”
Simon Moore, managing director of provider Computershare Voucher Services (recently changed from Busy Bees), adds: “This scheme has been very popular with the ordinary working person. It is one way that small and medium-sized businesses, which will form the backbone of economic recovery, can help their employees when they can’t afford pay rises.”
About 340,000 families claim childcare vouchers through about 35,000 employers. This scheme can save a higher-rate taxpayer £1,195 and a basic-rate taxpayer £962. Every parent can use the vouchers, so they can potentially save a couple £2,390 each year.
Prospective Winchester MP Steve Brine, who is bringing up his own young family here in the city added; “This is a time when many families face financial pressure and may need now, more than ever, to have access to affordable childcare. The Government is wrong to cut the employer-funded childcare voucher scheme which 300 000 parents rely on to help cope with their childcare costs. Most of these parents are basic rate tax payers like hundreds of parents here in Winchester, not the super rich.
“This scheme has been cut to cover part of the cost of an unfunded policy announcement made by the Prime Minister at last years Labour Party Conference, that all 2 year olds would receive 10 hours free childcare.
“Childcare vouchers are a simple and straightforward way for parents to pay for their childcare and in turn, save money to help against the costs. Unfortunately for many parents, even with childcare vouchers, affording childcare is one of the biggest issues that they will face when their children are young.
“We do not support the Government's decision to scrap this support but in this extremely difficult economic climate, I cannot give you a firm commitment that Conservatives would reinstate these tax and National Insurance exemptions but I will be arguing the case with my colleagues in the Shadow Cabinet at every possible opportunity.”
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