Issues

Local economy stands to lose £13 million

Marie Marin EFC You might have heard that the UK Government introduced the Childcare Payments Bill at Westminster on 5 June, which will introduce a new system of childcare support from next autumn.

Known as the Tax-Free Childcare scheme, it offers families savings of up to £2,000 per year on their childcare costs. But the crucial clause is “up to”. Parents would have to have childcare costs of £10,000 per child to save £2,000, and a recent survey of around 24,000 parents across the UK suggested that only 20 per cent will be eligible for this level of support.

Many families will actually be better off using the current Childcare Voucher scheme, which will close to new entrants when the new scheme is introduced.

Through childcare vouchers, families can save £1,866 each year on their childcare costs. The scheme is operated through employers who offer it to staff as a benefit, enabling them to attract and retain employees and make financial savings. For each employee who joins the scheme, the employer saves on national insurance contributions.

At present, 11,000 parents in Northern Ireland are using the Childcare Voucher scheme, making an annual collective saving of £9 million. In addition, around 1,000 employers offer the scheme and save £4 million. In total, £13 million is generated annually through the childcare voucher scheme benefiting parents, employers and the local economy.

We are calling on the Assembly to consider the financial implications of closing the Childcare Voucher scheme before finalising plans to legislate for Northern Ireland.

Removing the Childcare Voucher scheme could undermine the Executive’s efforts to drive economic growth and reduce unemployment and economic inactivity. It will have a detrimental impact on local families and employers who will lose out on substantial savings, and we hope a solution can be reached to protect the £13 million savings currently being derived through this scheme.

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