Stall in tax-free childcare spells danger for closing gender pay gap
Government spend on Tax-Free Childcare rose by just two per cent to £240.5m in the past year, despite enhanced take-up by parents, and rocketing prices further straining the return to the office.
There are fears that the sharp slowdown in government spending in this area could make childcare unaffordable for some parents, especially as the rate of inflation hits 5.4 per cent.
Jon Taylor, Head of the Employment at law firm EMW said the number of families who have an open account in 2020/21 was 219,375, a 15 per cent increase on the 191,185 families in 2019/20.
Tax-Free Childcare is a benefit where the Government pays a £2 ‘top-up’ for every £8 a parent pays to their childcare provider. It is available to all parents with a child under 11 earning over the minimum wage.
Taylor said: “The dramatic slow-down in the Government’s spending on this policy risks hindering many women’s ability to return to the workplace, exacerbating the gender pay gap.”
“As inflation threatens to significantly increase childcare costs, the Government should bear some of the burden for parents who have faced a challenging few years of home-schooling. This would effectively subsidise childcare, which the average salary is struggling to afford.”
“Expanding the policy could also help tackle the current shortage of employees, as more working-age adults are freed up.”
Parents are calling for the Government to increase the amount of money allocated for the Tax-Free Childcare policy in order to make childcare more affordable for families.
The UK currently has the third most expensive childcare system in the world, with parents spending 30 per cent of the average wage on childcare annually.
EMW said that on top of increasing the spend on the policy, the government should do more to make sure families are aware of the benefit. Just over 200,000 families currently have a ‘Tax-Free Childcare’ account, whereas 1.7 million families are thought to be eligible.