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PM warned over childcare vouchers Brown defends childcare changes
(about 1 hour later)
Plans to phase out childcare vouchers for most parents could harm Labour at the election, nine ex-ministers have warned in a letter to Gordon Brown. Gordon Brown has defended his record on childcare after more than 40 Labour MPs attacked plans to phase out money-saving vouchers used by most parents.
More than 300,000 families use them to save up to £2,400 a year through tax relief on the cost of childcare. Nine ex-ministers have urged a rethink, saying that axing the vouchers, used by 300,000 families to save £2,400 a year, could hit Labour at the next election.
Mr Brown says this relief is badly targeted and wants to divert money to fund nursery places for two-year-olds. Mr Brown told MPs that no government "had done more" for childcare and no-one getting support now would lose out.
But more than 75,000 people have signed a petition on the Downing Street website calling for a rethink. More than 75,000 people have now signed a No 10 petition urging a rethink.
Mr Brown posted a response to the petition saying about one third of the benefit from the tax relief on childcare vouchers went to higher rate taxpayers. Reassurance
"No-one who is currently using the scheme will be affected in the next five years," he said, adding that working parents on lower incomes would get more support through tax credits. As the row over the issue deepened, 43 Labour MPs wrote to the Guardian saying the plans to phase out tax relief on the cost of childcare would penalise families with young children.
About 340,000 parents take part in the vouchers scheme, which was introduced in 2005 and can be used for nurseries, nannies or child-minders. Mr Brown says this relief is badly targeted, with one third of the benefit going to higher rate taxpayers, and wants to divert money to fund nursery places for two-year-olds.
Former minister Caroline Flint explains why she opposes the changes Asked about the issue during prime minister's questions, he denied suggestions from Tory MP Andrew Mackay that the move would be "immensely damaging" for working parents.
It involves parents sacrificing up to £243 of their salary - before tax and national insurance are taken off - in exchange for electronic "vouchers" which are then paid to Ofsted-registered child carers, from au pairs to nurseries. No government has done more to advance childcare in our country Gordon Brown
No-one getting tax relief now would lose out over the next five years, the prime minister said, adding that he hoped people would "welcome" this reassurance.
"No government has done more to advance childcare in our country and support for childcare and we will continue to do so in the next few months," he told MPs.
About 340,000 parents take part in the vouchers scheme, introduced in 2005, which can be used for nurseries, nannies or child-minders.
It involves parents sacrificing up to £243 of their salary - before tax and national insurance are taken off - in exchange for electronic "vouchers" paid to Ofsted-registered child carers, from au pairs to nurseries.
The Treasury wants to phase out this tax break, which is equivalent to a 31% saving on the first £243 spent on childcare costs each month for basic rate taxpayers, or 51% for those paying the higher rate.The Treasury wants to phase out this tax break, which is equivalent to a 31% saving on the first £243 spent on childcare costs each month for basic rate taxpayers, or 51% for those paying the higher rate.
However, former health secretary Patricia Hewitt, ex-education secretary Lady Morris, ex-chief whip Hilary Armstrong and former Europe minister Caroline Flint are among 43 MPs to sign the protest letter. Former health secretary Patricia Hewitt, ex-education secretary Lady Morris and former Europe minister Caroline Flint are among the MPs to call on Mr Brown to reconsider the move, saying it would lessen opportunities for two parents to work and make childcare less affordable.
'Penalising parents'
According the Guardian, it says: "Withdrawing [the vouchers] will penalise a significant number of lower rate taxpayers, reduce the overall amount of funding available for childcare, reduce parental choice and impact negatively on the economy as the UK moves towards recovery.According the Guardian, it says: "Withdrawing [the vouchers] will penalise a significant number of lower rate taxpayers, reduce the overall amount of funding available for childcare, reduce parental choice and impact negatively on the economy as the UK moves towards recovery.
'Wrong move'
"Crucially, in the run-up to an election, it will remove support for working parents and for businesses in key marginal constituencies.""Crucially, in the run-up to an election, it will remove support for working parents and for businesses in key marginal constituencies."
The 43 MPs have also signed a Commons motion warning the move would exacerbate the gender pay gap, lessen opportunities and incentives for two parents to work and make childcare less affordable. Former minister Caroline Flint explains why she opposes the changes
Caroline Flint, who resigned from the government in June criticising Gordon Brown's treatment of women MPs, urged No 10 to reconsider. Ms Flint, who resigned from the government in June criticising Gordon Brown's treatment of women MPs, urged No 10 to reconsider.
"To take something that helps parents to pay for childcare, which is still very expensive and a struggle for many families even on middle incomes, seems to be the wrong thing to do," she told the BBC News channel"To take something that helps parents to pay for childcare, which is still very expensive and a struggle for many families even on middle incomes, seems to be the wrong thing to do," she told the BBC News channel
'Difficult choices' Business Secretary Lord Mandelson said he would study the letter but he warned its backers to be realistic about the tough spending choices the government faced.
Business Secretary Lord Mandelson said he would study the letter but he warned its backers to be realistic about the tough choices the government faced over its spending priorities.
"If you are going into a period of public spending constraint, when you have to make difficult choices, you will have to target the resources you have at those most in need," he told 5Live Breakfast."If you are going into a period of public spending constraint, when you have to make difficult choices, you will have to target the resources you have at those most in need," he told 5Live Breakfast.
If you are going into a period of public spending constraint, you will have to target the resources you have at those most in need Business Secretary Lord Mandelson
"They [the signatories] can't have it both ways. They can't both say that we have got to maintain all our policies and all our resources for all those benefits we currently make available and, at the same time, be fiscally responsible and rebalance our public finances in the way we need to.""They [the signatories] can't have it both ways. They can't both say that we have got to maintain all our policies and all our resources for all those benefits we currently make available and, at the same time, be fiscally responsible and rebalance our public finances in the way we need to."
Some Labour MPs have likened the anger over the issue to that which triggered the revolt over 10p tax last year.Some Labour MPs have likened the anger over the issue to that which triggered the revolt over 10p tax last year.
But John McFall, Labour chairman of the Treasury Select Committee, said the current situation was a "far cry" from the 10p rebellion and he believed ministers would be able to address people's concerns by handling the changes "sensitively". But John McFall, Labour chairman of the Treasury Select Committee, said the current situation was a "far cry" from the 10p rebellion.
"We don't want families to lose out needlessly over this issue but we want to ensure we are helping people that should be helped," he said."We don't want families to lose out needlessly over this issue but we want to ensure we are helping people that should be helped," he said.
Childcare vouchers are handled by private firms, which charge a small percentage administration fee. However, estimates suggest just one in five employers offers the scheme.
Are you a parent who uses childcare vouchers? What do you think of the government's plans to phase them out? Send us your comments using the form below.Are you a parent who uses childcare vouchers? What do you think of the government's plans to phase them out? Send us your comments using the form below.
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