How to help working parents | Incentive & Motivation

The Government has announced that the new Tax-free Childcare scheme will replace the Childcare Voucher scheme fully by 2020. Employers need to find ways to continue to engage with working parents, says John Woodward, MD of Busy Bees Benefits.

Childcare Vouchers, operated as a salary sacrifice scheme, have long been a popular and valuable employee benefit. However, the introduction of the Tax-free Childcare scheme, planned for 2015, will mean that employers could be taken out of the equation.

As one of the founders of the Busy Bees Group, the largest childcare provider in the UK and a provider of the Childcare Voucher scheme, we have long understood the financial pressures experienced by working families. We welcome the opportunity the new scheme provides. It will help more parents to save money on the cost of childcare.

Employers can and should still be a part of the equation and should ensure they are in a position to inform parents of the support available to them, even though it will be the responsibility of the parents to choose their Tax-free Childcare scheme provider. It is in the interests of business to help make work pay for working parents, who, for the first few years of their child’s life can face childcare bills which may make them think twice about returning to work. It is vital that businesses recruit and retain skilled, knowledgeable staff. Ask yourself what information you currently provide to staff who will be taking maternity or paternity leave. The more information and support you can provide to a new parent about their options for good quality, affordable childcare and funding support before they even have their family, the more likely they are to decide to return and remain loyal to the organisation.

A consultation is taking place before the operators of the Tax-free Childcare scheme (current Childcare Voucher providers) can develop systems and launch it in 2015. Until then, there is obviously a window for any employers not operating a Childcare Voucher scheme to provide one and make savings of up to £400 per employee per year in employer National Insurance contributions.

Signing up to Childcare Vouchers now will also give working parents a choice: some families will be better off under the Tax-free Childcare scheme but some will be significantly worse off – namely those families where two working parents have one child in early years care. If both parents use Childcare Vouchers, they could save up to £1,866 a year. Under the new scheme, they will save only £1,200. Busy Bees Benefits is already campaigning to increase the value of the Tax-free Childcare scheme in line with average childcare costs and ensure it is index-linked so that its value is not gradually eroded. An e-petition is available to sign at http://epetitions.direct.gov.uk/petitions/48405

For many companies, particularly smaller ones, Childcare Vouchers may be one of few benefits on offer to employees, leaving their overall package looking rather thin. Those companies will need to think again about what they can offer staff. A benefit where the value can be felt immediately, such as one which provides discounts on everyday purchases or family days out, are one possible low-cost option which can save an employee hundreds of pounds a year.

Salary sacrifice schemes such as Cycle to Work may also be attractive depending on your workforce and location and would also bring some of the savings in employer National Insurance contributions which will be lost when the Childcare Voucher scheme finally closes in 2020. In these tough economic times it is even more important for businesses to make savings where they can whilst also making staff feel valued.

For more information, visit www.busybeesbenefits.com