The crisis in child care costs has reached critical levels. As parents feel forced to quit their careers, underfunded preschools close at record levels.
Yet Money Mail can today reveal that parents are missing out on nearly £3 billion in vital childcare support every year.
The tax-free childcare scheme tops up 20p to every 80p parents spend on nannies and nurseries — the equivalent of the basic-rate of income tax. It offers a maximum saving of £2,000 per child each year — or £4,000 for a disabled child.
Support that is not being used: The tax-free childcare plan adds an additional 20p per 80p parent spends on nannies or nurseries. It offers a maximum saving of £2,000 per child each year
However, the perk is still available to children younger than five who are eligible. However, the number of participants has fallen drastically since the 2017 introduction of the program.
Fewer than 300,000 have an account in use — less than a quarter of the total eligible for help, according to March 2021 data provided by HM Revenue & Customs in response to a parliamentary question. Another 225,000 people have an account that is not used, but it may be because they don’t use it often.
The government also spent £650 million less than expected on the scheme in the 2019/2020 financial year. If all eligible families who do not currently benefit from the perk signed up overnight it would cost the Treasury an extra £2.8 billion a year, the figures show.
Critics argue that the scheme is not being promoted enough.
It is a common complaint that parents have heard about, but they didn’t know. Many of them only discovered the information after talking with friends and doing some research.
Official figures show that in 2018/19, the government spent £1,113,270 publicising the perk.
But by 2020/21, this figure had dropped to £197,338. And for 2021/22, the government is forecast to spend only £151,205.
What’s more the application process can be confusing and protracted — with parents asked to reapply every three months.
Stella Creasy, Labour MP for Labour has always been vocal in her support of working parents. She made headlines last November when she carried her 3-month-old son on her chest while she debated in the Commons.
You feel like you are in a little secret
Spreading the word: Bethany Dempsey, her five-year-old son Oscar and Eden, their two year old daughter
Bethany Dempsey was a mom blogger who struggled with making ends meet while taking care of Eden, 2, and Oscar, 5.
Oscar was at school, but childcare for Eden cost £680 a month — just £100 less than Bethany’s salary of £780 a month.
Dean Ashford was a council worker who kept their family on its feet with his wages.
When Bethany changed jobs, a friend recommended the tax-free childcare scheme. ‘We’re saving hundreds on childcare bills now.
But it feels like the scheme is kept a secret,’ says Bethany.
She said, “The problem with tax-free childcare for children is that the majority of parents do not even know it exists.” The government must either increase awareness or take funds to create a better scheme.
“I’m not asking for new money from the government. I’m asking parents for their money back.
“Childcare expenses have increased at four times rate than wages in the past two decades,” she says. This is a significant portion of parents’ cost of living.
With families in a crisis of cost-of-living, and a torrent of price increases, tax rises, and other financial pressures, the need for childcare assistance has never been greater.
Neil Leitch is the chief executive officer of the Early Years Alliance. He stated: “With tax-free childcare still failing to attract sufficient enrollments several years after its introduction, it’s hard to believe that the government wouldn’t choose not to invest the excess funds from this scheme in the early years sector.”
Joeli Brearley is the founder of Pregnant Then Screwed. The application process can cause parents to be discouraged.
She said, “I can still remember the moment I applied for tax-free childcare. I just wanted to throw my computer out the window.”
“I have heard that a lot from parents. They say the application form is long and takes a lot more detail. It is also necessary to apply again every three months.
The average annual price of a nursery place now stands at £14,000 per child — more expensive than university tuition fees.
Mothers are often the ones most affected by rising nursery costs.
Pregnant then Screwed estimates that there are approximately 870,000 UK stay-at home moms who would like to return to work, but can’t afford it.
A third either pay to go to work – because their childcare outgoings exceed their wage — or only just break even.
Ms. Brearley states that “many mothers I know pay to go to work simply because they cannot give up their dream of having a family.”
The situation has been made worse by the pandemic.
The Fawcett Society, a charity that studies the future of childcare in 2020 discovered that 33% of working mothers report losing their work hours or lost productivity due to lack of childcare.
Nurseries also have struggled to keep open. 2,549 nurseries closed between March 2020 and December 2020.
Only 0.5% of the UK’s GDP is currently spent on services for early childhood.
For comparison, only 1.1% of the GDP is used to pay for childcare subsidies in Nordic nations like Denmark or Sweden.
“We’re constantly arguing about university fees and their value.
However, we don’t talk about childcare the same way,” says Rachel Carrell, mother of Koru Kids, which she created to provide affordable childcare.
Many couples are unaware of the cost of childcare and go blindly into parenthood.
“Many of the people that I have spoken to feel priced out from parenthood.”
HMRC claims that the tax-free childcare program was used by 316,000 families in September.
According to a spokesperson, “Tax-free childcare” is an excellent offer for parents who are working and need financial assistance with childcare.
The offer is being used by more and more families, with nearly 50 percent more taking advantage than March 2020.
“We encourage all eligible families to join the scheme through stakeholders, social media and press. We will keep exploring ways to increase participation.”
h.kelly@dailymail.co.uk