News

Ministers urge Brown to keep tax relief on childcare vouchers

A group of nine former Government ministers, including the former children's minister Beverley Hughes, wrote to Prime Minister Gordon Brown yesterday (Tuesday) to protest about the decision to axe tax relief on childcare vouchers.

Patricia Hewitt, the former health secretary, and Caroline Flint, the former Europe minister, are also among the signatories urging the Prime Minister not to abolish the benefit on employer-supported childcare, which they say is 'greatly unfair' and would undo one of Labour's landmark achievements.

In the letter, the MPs said that the Prime Minister used out-of-date figures to justify withdrawing the scheme by claiming that it mainly benefits higher-rate tax payers.

Mr Brown said he wants to redirect the money to provide ten hours of free childcare a week to more than one in three two-year-olds by 2015 (News, 29 September).

The letter said that childcare vouchers support more than 340,000 working parents.

'Withdrawing them will penalise a significant number of lower-rate taxpayers, reduce the overall amount of funding available for childcare, reduce parental choice and impact negatively on the economy as the UK moves towards recovery,' the MPs said.

The other MPs signing the letter include Estelle Morris, Hilary Armstrong, David Cairns, Denis MacShane and Sally Keeble.

More than 70 MPs have signed a parliamentary motion against the move to scrap tax relief.

More than 76,000 people have signed a petition on the Downing Street website against the plan and it is the highest ranked petition on the website.

The Prime Minister has posted a response to the petition. Mr Brown said, 'No one who is currently using the scheme will be affected in the next five years. We are phasing in the changes so that families who currently benefit don't lose out in the next Parliament.'

Alison Garnham, joint chief executive of the Daycare Trust, said, 'By abolishing tax relief on childcare vouchers the Government are simply robbing Peter to pay Paul. Childcare remains an expensive but essential commodity for many families, and childcare vouchers play an important role in helping families meet these costs. Many families on modest incomes, including public sector workers such as nurses currently benefit by as much as £1,195 a year.'

'This move would mean we would effectively lose one of the few contributions employers make to childcare.'

The petition is at http://petitions.number10.gov.uk/