As announced in April’s Budget statement, the Government proposes to introduce a new childcare voucher system from 2015. Yet research* from Jelf Employee Benefits found that over a third (36%) of employers who currently offer a childcare voucher scheme are considering scrapping their existing scheme long before the replacement system is finalised or available. We’ve been using childcare vouchers since K started nursery and they must have saved us hundreds of pounds. Jelf is concerned that such a decision by employers may, in extreme circumstances, force some employees to re-evaluate whether they are financially able to continue working.
Steve Herbert, head of benefits strategy, Jelf Employee Benefits says: “With more than 2 years before the proposed replacement scheme is available, it’s difficult to see why employers would want to remove their Childcare Voucher offering earlier. Although the percentage of employees who use this benefit is relatively low, for those that do, it is often a key incentive, and an important bridge to meeting the ever growing costs of childcare in the UK. If employers remove this benefit now, they risk losing key employees, and disengaging many others.”
“I have been trying to establish what factors would drive employers to scrap their Childcare Voucher schemes before 2015. And it’s proving more difficult than I expected. I have had the following reasons advanced as some of the perceived problems with the current voucher system:
1) The benefit is perceived as sexist, as it favours women over men
2) Hardly anyone uses it, so it’s a waste of time and money
3) It’s discriminatory, as only employees with children can utilise this benefit
4) It’s a benefit that has to be continued at employer cost throughout maternity leave
Now if these are the only drivers (and it’s difficult frankly to think of any others), I would counter the above four points (in order) as follows:
1) It’s not sexist. Either (or both) parents can claim Childcare Vouchers currently. For some reason there has always been the latent perception with some employers that it’s a benefit for mothers only. It’s not, and therefore (by definition) not sexist either.
2) It’s true that only a very small number of employees typically take advantage of Childcare Vouchers. Yet the benefit costs virtually nothing to provide (in fact the use of such vouchers creates a National Insurance saving for the employer). So where is the cost driver to remove this? Not only that, but for those few employees who do avail themselves of the vouchers, it’s often a really important benefit, and sometimes the difference between being able to work or not.
3) True, it is only of use for those employees with Children. But so what? Other employees are not losing out by this benefit being offered (as above, it costs hardly anything for the employer to provide Childcare Vouchers). It’s therefore not taking anything away from those without children (some of which may yet have need of Childcare support in the future).
4) This is the only argument that, to me, stands up. But the numbers of women approaching maternity leave who are already funding Childcare Vouchers is probably quite small, and the amounts involved capped by the usual Childcare Voucher limits as well, so for most employer’s I really can’t see this as a huge issue.”
Are you using vouchers? What do you think?
Jelf is also highlighting that there are some key changes between the existing schemes, and the proposed replacement in 2015. The new system is intended to only be available to two parent families where both parents work, and is only initially targeted at children under age 5, whereas the current system is available for two parent families with only one income, and for most school age children. It is proposed that those who will be worse off under the new system will be able to retain their existing rights, yet crucially this may only be available where employees are able to continue to save in their current provision in the run up to the 2015 change. Herbert continues, “If employers pull the plug on their Childcare Voucher offering prior to the commencement of the new system, they are condemning their workers to a period with no Government support for this significant daily cost, and also potentially preventing some parents from ever again being able to achieve such support in the future. Jelf would therefore strongly urge employers to consider the implications to both employees and employer before any decision to remove Childcare Vouchers is taken.”