The Government reckons that absenteeism costs the British economy around Pounds 5bn a year, or 476 per employee per year. Employers cite childcare problems as a significant contributor to this statistic.
'Apart from the obvious financial cost of having continually to fill vacancies, firms can also experience a dip in their productivity and suffer from low staff morale when they lose a skilled and valued member of staff,'
says a DfES spokeswoman, providing the business rationale for employers to help staff with their childcare needs.
From next April employees can receive up to 50 a week of their childcare costs free of tax and national insurance if their employers agree a contract with an approved carer or provide them with childcare vouchers to pay an approved childcarer, so long as the scheme is open to all employees.
Conferences organised recently by the National Childminding Association, with the backing of voucher provider Accor Services, and the London Development Agency (LDA) in conjunction with the Daycare Trust and the nursery chain Bright Horizons Family Solutions, have indicated the sector's enthusiasm for the scheme.
Speaking at the LDA event, minister for children Margaret Hodge said that many employers 'don't see supporting childcare as a business concern' and revealed that only 2 per cent of childcare was funded by employers.
The Government originally said it would have finalised details of the light-touch approval scheme for home-based carers, such as nannies, by mid-October. However, as Nursery World went to press, it was still dragging its heels on the issue.
A DfES spokeswoman says, 'We are expecting to be able to announce the successful contractor to deliver the service and the criteria for approval soon.'
Good practice
Daycare Trust director Stephen Burke anticipates that the current involvement of one in ten employers in childcare could rise to one in four by the end of the first year of the scheme.
'The key thing is information for both employers and employees who are parents, making sure that it is clear, simple and straightforward,' he says, pointing out that the Inland Revenue's website has been revamped to facilitate this.
'We expect a massive groundswell to be evident in the next three months.
Employers need to be signing up now with voucher companies, not leaving it to the last minute.'
Carolyn Howes, Inland Revenue policy adviser, expects the numbers using childcare vouchers to treble, mainly through 'salary sacrifice' where the employer offers the non-cash benefit in exchange for less pay to the employee.
Anne Ross, corporate business manager of Accor Services, also expects there to be 'an avalanche' after the April changes, with a sharp rise from the 800 companies and 30,000 employees it deals with now. But she believes that many companies will wait until April because they do not want to change their payroll systems in the middle of the financial year.
As a result of the conference organised by Daycare Trust, Bright Horizons and the LDA, a good practice guide is being produced to show employers the economic benefits of helping their staff with childcare.
Denise Freeland, senior childcare manager at the LDA, says that the tax and national insurance exemption is just one element in seeking to enlist the backing of employers. 'We are not just looking at workplaces nurseries and employers helping with childcare costs,' she explains. 'It is much broader and includes the need for robust family-friendly policies and the right to flexible working.'
Ms Freeland says it should be incumbent upon employers to survey their staff to establish how many children they have and whether childcare is an issue. She would also like to see 'a massive marketing campaign' to ensure the message gets through to both employers and employees. A survey by Accor earlier this year of 113 human resource personnel found that while 96 per cent of firms had heard of vouchers, only 18 per cent offered them to their employees.
Anne Longfield, chief executive of the charity 4Children, is also an advocate of action to highlight the new arrangements and a forum for employers to share best practice.However, while she regards the tax and NI exemption to be 'a useful incentive', she thinks that unless employers recognise a business imperative in helping with childcare, a Norwegian-style levy of employers might be necessary ultimately to make the system viable in the long term.
Susan Hay, chairwoman of Bright Horizons Europe, is also sceptical about reliance on tax incentives, describing them as 'a slippery slope'. She warns that employer-supported childcare can only be successful and sustainable if it is seen 'as an investment rather than a cost'.
Ms Hay explains, 'If something belongs to the core values of the organisation, and speaks to its business objectives and is measurable as such, then it is not subject to market-driven forces and becomes ingrained and valued in a totally different way.'
With 15 years' experience of working closely with employers - all 95 of Bright Horizons' nurseries are, in some way, linked to them - she adds a new dimension to the debate by suggesting that there may now be 'an appetite in the country to accept an element of tax-pure Treasury funding', to meet childcare costs.
Meanwhile, Bright Horizons is planning an impact survey of companies who help their staff with childcare. A survey it conducted in the US found that employers who helped their employees with childcare needs had a 50 per cent reduction in staff turnover and retained 97 per cent of their top-performing staff.
A local childcare strategy group in London has calculated that if the findings of its local survey were applied to the NHS nationally, the health service could reduce the costs of staff turnover by more than 300m a year (see box).
On approval
But even as the benefits of employer-supported childcare are being recognised, there is some concern that while the countdown to the new tax and NI arrangements is well advanced, the approval system remains unclear.
Anne Ross says that 30 per cent of those redeeming Accor vouchers are non-registered carers, such as nannies and family members. She expects non-registered nannies to be given priority when the new approval system is up and running in January.
However, she believes that some voucher providers, many of them operating salary sacrifice, have up to 60 per cent of their clients using unregistered carers. The Government has already indicated that non-approved carers, such as grandparents and family friends, who currently qualify for some NI exemption, will not enjoy the 50 tax and NI exemption under the new arrangements. At its recent conference the National Childminding Association called on employers to help staff with the process of getting their childcarers approved.
In the meantime the Government is urging regional development agencies to follow the lead of the LDA in pressing employers to embrace the new arrangements. It says local authority childcare teams, work/life balance teams, business links and Job Centre Plus, together with Children's Information Services, are also playing their part in encouraging participation.
How successful they have been in engaging employers will not be clear until after next April. NW
Further information
* http://www. inlandrevenue.gov.uk/childcare
CASE STUDIES
* Tayside police force in Scotland introduced childcare vouchers last year after a survey of its staff financed by the Department for Trade and Industry's work/life balance challenge fund showed that childcare was a key concern.
Wilma Canning, an equal opportunities adviser with the force, says, 'We wanted something that was a universal benefit. We didn't want to set up a creche in one area which would only help a limited number of employees.'
With ten staff already involved in the voucher scheme, she anticipates a rapid increase in take-up once the tax and national insurance exemption starts taking effect and becomes widely known.
* Angela Humvy, childcare co-ordinator for five NHS trusts in north and mid-Hampshire, says that between 60 and 70 employees currently receive help with childcare through salary sacrifice and that it has encouraged most women employees to return after maternity leave.
She does not foresee a problem with carers remaining unapproved and therefore ineligible - from the outset, she says, staff were told they should use the electronically-operated voucher scheme only for registered childcare.
* In a survey of NHS staff using childcare support, the south-east London NHS Childcare Strategy group found that 96 per cent said it had enhanced the image of the NHS as a good employer, 95 per cent reckoned it had reduced stress, and 88 per cent said it had improved morale, while 87 per cent said it had helped them to continue working for the NHS.
If the strategy helped to reduce the national vacancy rate by one per cent, the group said it would mean an additional 11,000 people recruited or retained. This could save the NHS 300m per year, if the estimated average salary of staff is 28,000.
