Few policy areas are as important to families as childcare. For parents up and down the country, getting help with the cost of their childcare enables them to get back to work after starting a family. With childcare costs continuing to rise, political parties, including Labour, are now looking at ways to alleviate the pressure placed on household budgets.

The current childcare voucher scheme is one form of childcare support available to working parents and the only initiative that provides a direct link between the employer and the employee to help with the cost of their childcare. Operating it through the employer allows regular deductions from employee pre-tax salaries to be used solely on childcare. This saves parents money on the cost of their childcare, through income tax and national insurance savings. For the average two-parent basic-rate taxpaying family, vouchers can save up to £1,866 a year on the cost of their childcare.

For many families, this support is vital. Research conducted last year showed that one in five parents would have to leave their jobs if the scheme was no longer available, while an additional 38 per cent said that they (or their partner) would have to reduce the number of hours they work. In essence, the support that these working mothers and fathers get through the childcare voucher scheme is inextricably linked to their ability to work.

The coalition government is currently consulting on a new form of support, which will eventually phase out the current childcare voucher system – tax-free childcare. Elements of the new proposal are laudable. More funding is being directed at childcare support and the scheme will also be made available to the self-employed. However, the future role of the employer in providing the scheme, a key element that has made childcare vouchers successful, looks uncertain.

For many employers, offering childcare support is an important aspect of their family-friendly working practices. A recent survey of over 1,600 businesses who offer childcare vouchers by the Childcare Voucher Providers Association found that more than 97 per cent do so out of a genuine desire to help their staff with the cost of childcare. Similarly, 65 per cent of employers told us that they would continue to offer the scheme even if the employer’s national insurance contribution saving that they currently make is removed.

While for larger corporations offering on-site childcare provision may be a feasible option, for many SMEs childcare vouchers provide the most cost-effective and efficient form of support for their employees. The study revealed that 86 per cent of those who offer vouchers believe the scheme’s benefits outweigh its administrative requirements, which constitutes less than 30 minutes a month for the vast majority (77 per cent) of businesses.

However, it is not only businesses and families who benefit from the employer link in the current voucher scheme, but also government. By using the salary sacrifice mechanism, government is able to vastly reduce the impact of fraud and error on the scheme to an almost negligible level. It allows for easy identification of scheme eligibility and minimises fraudulent claims.

While the debate on the best way of supporting parents with their childcare costs will continue in the lead-up to the 2015 general election, Labour should take note of the value of the current childcare voucher scheme, and the benefit it brings to employers, parents and government alike.

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Julian Foster is managing director of Computershare Voucher Services

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Photo: thebiglunch