The move, based on proposals outlined in the Government's consultation document Employer-supported childcare, published earlier this year, is aimed at making childcare far more affordable for working parents and encouraging them to return to work. It would also make it easier for employers to offer childcare support.
John Woodward, managing director of nursery group Busy Bees, said he expected there to be a boom in childcare vouchers. He said they would make 'a dramatic difference' to parents, day nurseries, other childcarers and employers.
The Government has proposed 50 per week tax exemption for each employee using registered childcare. Mr Woodward said this could mean savings of Pounds 32 a week on childcare costs for basic-rate taxpaying parents with two children at full-time nursery, amounting to savings of around 1,600 a year.
Busy Bees' own voucher scheme, set up four years ago, is worth 25m a year. The company currently has a 40 per cent share of the voucher market, catering for just over 6,000 parents, but Mr Woodward said this was 'very, very small in terms of the opportunity'.
He said the Government's proposals for more affordable childcare for parents offered up wider challenges for the sector in terms of the recruitment and retention of good-quality staff.
Mr Woodward added that parents generally had a good understanding of the industry and of the need for better pay, and savings in fees afforded by tax breaks could go towards wage increases.
'I would hope our parents would really take us to task if we put our fees up and didn't pay staff more money,' he said.
Stephen Burke, director of Daycare Trust, said, 'One of the big issues parents raise is the cost and affordability of childcare and we would welcome any means introduced by the Chancellor, either through tax credits or tax exemptions for parents.'