Gill Smith, who runs Gooseberry Bush nursery in Camborne, said that although these problems do not threaten the sustainability of the 80-place facility, it is 'on the tightest budget in 16 years' because of the soaring outstanding fees.
She has called in a debt collector but is not hopeful of recovering money, 'because people often disappear off the face of the earth' once they have acquired the nursery's registration number, built up debts and then used the childcare element of the tax credit to pay for other things.
She said that in the past, Government ministers have rejected pleas for supply-side funding to providers, arguing that money had to be passed through the tax system to parents.
Renewed concern about levels of tax credit fraud emerged last week when the Commons Public Accounts Committee produced a report revealing that the total amount being lost to fraud and error is still running at £1 billion a year.
A total of £6 billion in overpayments has arisen in three years, with £2.3 billion being written off because it is unlikely to be recovered.
Purnima Tanuku, chief executive of the National Day Nurseries Association, said, 'We have heard from a number of nurseries who have large debts due to parents either falling behind with fees or leaving the setting. The tax credit system is fraught with problems for both the provider and the parent, and NDNA believes that this support should go directly to the provider.
'This would not only reduce fraudulent claims but also make childcare cheaper at the point of delivery for parents, opening it up to more families. In addition, paying nurseries tax credits directly would also encourage the take-up of this support, as parents would not have to fear huge clawbacks.'
Emma Knights, joint chief executive of the Daycare Trust, said, 'We think some work needs to be done to find out exactly why parents are not taking up childcare places, and on promoting the childcare element of Working Tax Credit, which is a lifeline to many working parents but which also suffers from very low take-up.
'It may also be the case that parents - and nursery providers - find it hard to predict the exact amount of help they will receive through tax credits, and in particular how much of that help will be for paying for childcare. The credits are awarded on a sliding scale according to the parents' income, and it could be that parents who get only the minimum then decide to look after their children at home.'
FURTHER INFORMATION:
http://www.dfes.gov.uk/localauthorities/section52/subPage.cfm?action=sec tion5.
