Childcare support gap

Our country does not have a unified system of financial support for childcare. Instead, it has a number of different systems which work in different ways and have been introduced at different times to meet different needs

These systems are currently in a period of change: the Government has introduced a new tax free voucher scheme and are rolling out Universal Credit. This means that from 2016 there will be four childcare support systems: tax credits, Universal Credit, employer-supported vouchers and the new tax free voucher. Some families will also receive help with their childcare costs through Job CentrePlus, colleges and Housing Benefit.

New research by the Family and Childcare Trust takes stock of the systems that will be in place after these changes have come into effect. Our research highlights two clear problems:

  • The confusing range of systems in place, and the complex way they operate and interact, means that many families will not be able to work out which system will best support them and they could lose out on vital help with childcare costs as a consequence.
  • Some 355,000 families fall into the gaps between different support systems. Households whose incomes vary from week to week – for instance, temporary workers and the self-employed – could be better off under the tax free voucher one month and Universal Credit the next. At present, they have limited ability to switch between systems as their circumstances change.

This represents a real barrier to work and undermines the Government’s aim of making work pay. Childcare costs in the UK are the highest in Europe – with the exception of Switzerland – and parents spend more than a quarter of their income on childcare.

To address these barriers and make sure families get the support they need to make work pay, parents need to be able to switch between the different support systems more easily as their circumstances change, and better information to help them navigate the confusing landscape of childcare support.

The continued attention and resource that successive governments have devoted to childcare represents the depth of their commitment to this issue and is extremely welcome. Unfortunately, this has contributed to a mishmash of different systems building up over time, and a well-meaning mishmash is a mishmash all the same. In the longer term, we need one simple childcare support system that delivers for parents, for children and for the UK.

Duncan Lugton

Policy and Research Assistant