More Sheffield parents using government childcare scheme

More parents in Sheffield are using a government scheme to help with the cost of childcare, new figures reveal.

Tuesday, 23rd June 2020, 1:24 pm
Updated Tuesday, 23rd June 2020, 1:25 pm

Tax-free Childcare supports working families by topping up cash they pay into a pot for services such as childminders, nurseries and nannies.

But industry body the Early Years Alliance has labelled it a “dead horse of a policy” that penalises disadvantaged households, and which has seen poor uptake since its launch.

HMRC data shows mums and dads in Sheffield paid into tax-free childcare accounts for 3,025 children in 2019-20, up from 1,400 the previous year.

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More parents using government scheme

Families get 20p for every 80p they put into their account, up to £2,000 per child per year, or £4,000 for a child with a disability.

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The scheme, which was launched in 2017, is open to children aged 11 or under from eligible households, while those with disabilities can benefit up the age of 17.

While more families in Sheffield are benefitting from the subsidy, a comparison with population estimates suggests many are not.

The latest Office for National Statistics population figures show there are 79,921 children aged 11 or under in the area, meaning around 4% had accounts last year.

Not all children will qualify, either because their parents are not in work or claiming Universal Credit, tax credits, or certain other benefits, or if one of them earns more than £100,000 a year.

Parents also need to earn at least the equivalent of the national minimum wage for 16 hours per week – currently £139.52 for those aged 25 or over, but less for younger workers.

Across the UK, around 396,000 children had accounts paid into in 2019-20 – almost double the figure a year earlier – with the Government paying out £236 million in top-up contributions.

That equates to around 4% of children aged 11 or under across the country, according to the ONS data.

Neil Leitch, chief executive of the Early Years Alliance, said “only a fraction” of eligible families had registered for an account since they were made available.

He added: “Tax-free childcare has always been a regressive and fundamentally flawed policy which unfairly penalises disadvantaged families, as the more money parents can save towards childcare, the more government support they're entitled to.

"With the childcare sector in crisis and in urgent need of serious financial support, the last thing the Government should be doing is flogging this dead horse of a policy when they should be looking at serious alternatives which will actually help support disadvantaged families and ensure the wider sector survives the impact of the coronavirus outbreak."

Members of the early years sector have accused the Government of leaving them out of a recently announced £1 billion package aimed at tackling the impact of Covid-19 on young people.

The National Day Nurseries Association says ministers should use savings made due to low uptake of Tax-free Childcare to help the sector.

Chief executive Purnima Tanuku said: “Early years was shamefully left out of the support package announced for education last week – it’s time for the Government to right that wrong."

A government spokesman said: “Tax-free Childcare is a great offer for working parents and we continue to encourage more parents to apply for it.

"We’ve also put in place measures to ensure parents who are normally eligible for Tax-free Childcare will continue to receive the government top-up if their income levels fall due to the impact of coronavirus."

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