NDNA Says Reduction of Tax Credits has Huge Implications for Affordability of Childcare Places

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NDNA - Purnima TanukuNational Day Nurseries Association (NDNA) today responded to the Government’s Comprehensive Spending Review (CSR). Whilst NDNA welcomes the commitment to children in their earliest years, the organisation highlights that the reduction in the percentage of costs working parents can claim back for childcare will have implications for the affordability of childcare.

NDNA said the move to reduce the amount of childcare costs covered and the increase in working hours would affect parents’ ability to work, particularly those on the lowest incomes.

Purnima Tanuku, Chief Executive of NDNA comments: “Whilst we are pleased that children will continue to benefit from a continued 15 hour free entitlement and that more needy two year olds will be reached through a free place, we are concerned about a reduction in the amount families will be able to claim back for childcare. Parents’ ability to work or train is central to the successful recovery of the economy but reducing the amount of childcare costs a parent can claim will hurt the poorest parents the most. Low income families are the ones that can claim the highest proportion of childcare fees and a reduction to only 70% of their costs could mean that families cannot balance their finances. There may also be cases where an employer is unable to offer additional hours to meet the new criteria of parents working 24 hours per week, so the contribution to childcare costs may be lost entirely and work is not an option. Nurseries will be very concerned that this move will hit the families who stand to gain the very most from their child being in high-quality childcare.“

“In addition, whilst it is good news for children and families that 15 hours of care and early learning will still be available for all three and four year olds, and that there is an offer for two year olds,  this means that resolving funding issues is even more pressing. NDNA looks forward to exploring how this can happen. The loss that nurseries have to sustain on these ‘free’ places means that many are struggling to survive. Without high quality nurseries the economy can not survive, and the current cuts to local authority budgets means that creating new childcare places is not an option. We must ensure that nurseries are funded properly for free places to ensure that they can play their full part in supporting families and the economy.”

She continues: “The ultimate affect of the reduction in Working Tax Credits could be that nurseries struggle even more as parents either find work does not pay because of childcare costs, or cut down on their usage by turning to informal care. NDNA will be urging government to look at this as part of the Single Universal Credit system as work will not pay if childcare costs are not considered and supported. Whilst NDNA understands the UK is in a period of austerity, we must recognise that parents have to be helped with the cost of childcare, children must be able to benefit from high quality experiences in their early years and vitally, the sustainability of nurseries must be supported so that parents can access the care that meets their needs.”

Read about the full spending review for childcare.

Source: NDNA

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4 thoughts on “NDNA Says Reduction of Tax Credits has Huge Implications for Affordability of Childcare Places

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  • October 20, 2010 at 6:52 pm
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    Gary Wilson is absolutely right. A private nursery place has a price. Either the government pays that price or if they cannot afford it, they give the parents a voucher for what they can afford and the parents make up the difference. It’s quite straightforward! At the moment, the government pays what it wants, the parents don’t pay top-up and the nursery owner makes up the difference – are the government having a laugh or what??? Sorry to sound facetious but what is happening at the moment is quite incredible – no other business would work this way!! Where else can you purchase something you’d like for two thirds of the price and expect the seller to make up the difference!! What a farce this whole scheme is!

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  • October 20, 2010 at 5:36 pm
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    I fully support the words of Purnima Tanuku but like many nurseries struggling to make ends meet, it is the problem of the none payment of fees by parents in receipt of childcare tax credits that gets me vexed. I’ve heard that many sob stories as to why their fees have gone unpaid…’my boyfriends car broke down and the garage would not let him have his car back, so I used my tax credit money to pay’…….’Christmas was more expensive than I thought and I spent it over Christmas’…..’the Tax Credit Office have stopped my payment and I can’t pay you until they send me more money’ I could go on with more but I’m sure every nursery will have their own favorite story that they have heard.
    Why when the government is looking to cut out waste, reduce inefficiency and stop benefit cheats can’t they pay the nursery direct or use the voucher payment system as a means of getting the money to the nursery?
    I attended a consultation well over a year ago at the NDNA where there were representatives of the Tax Credit Office there to hear our views on the problems of Childcare Tax Credits and I clearly remember that the conclusion was that payment should be to the nursery and not in cash to the parent.
    I know that the vast majority of parents receiving childcare tax credit claim it legitimately and use it as intended by paying their childcare provider in full and in a timely manner. It is as usual that small minority that cause the biggest problems.

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  • October 20, 2010 at 5:07 pm
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    Private nurseries simply need to be able to charge a top up fee.

    Gary Wilson

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