Tax-Free Childcare costs top £35m

An analysis of Government spending on the scheme by the Childcare Voucher Providers Association (CVPA) reveals that since 2014, £35.4m has been spent on developing and implementing the IT system, as well as on marketing, advertising and research for Tax-Free Childcare.

The CVPA has analysed monthly figures on HMRC spending, published on the gov.uk website.

As the major contractor, National Savings & Investments (NS&I) has been paid by far the largest sum so far – £34.3m for ‘costs relating to the development and implementation of the IT solution being delivered by ATOS’.

The ad agency WCRS has been paid £468,281 for marketing and advertising; digital solutions agency Orangebus, owned by Capita since 2016, has received £368,400 in payments.

The remaining costs have been largely to carry out research.

Parents and childcare providers continue to report problems with the online system, called the Childcare Service, operated by HMRC with NS&I.

Many parents are still unable to open or use their account. There have been numerous reports of parents who, after paying into their Tax-Free Childcare account, have been unable to access their money and left having to find it from elsewhere to pay their childcare fees or incur a ‘late’ fee.

CVPA chair Jacquie Mills, said, ‘We’re concerned that the Government’s Tax-Free Childcare scheme was rushed out ahead of the election to the detriment of parents. There have been a wide range of difficulties reported so far, which is deeply worrying.

‘We are urging parents to think carefully before switching irreversibly from childcare vouchers to TFC – not just because of the issues reported so far, but also because many families could actually be worse off financially through TFC compared to childcare vouchers.

‘We are therefore calling on the Government to reconsider their plans to close vouchers to new users from April next year.’

Writing on Twitter on 1 June, @TinaHaigh said,, ‘No childcare vouchers this month as had to cancel them to join TaxFree Childcare which isn’t working. Left with higher than expected costs.’

@Adiman81 tweeted on 2 June, ‘I’ve been totally locked out [from Tax-Free Childcare] for a week…nursery demanding money. Awful system.’

A parent in Northern Ireland told Nursery World that she has been waiting four weeks for her Tax-Free Childcare account to be approved.

The parent of two children, one of whom is registered disabled, said, ‘I have had an ongoing saga with Tax-Free Childcare for four weeks. Three weeks ago, phone staff created my application as there were bugs on the website and I was not able to create the application. I phoned ten days later as I heard nothing from them, and I have been phoning ever since with no progress.

‘Staff regularly claim that I have not signed up. Eventually they find me on the system and say I have been referred to technical support, who apparently have a massive backlog of issues to resolve, so they have no idea when my application will be dealt with. Meanwhile I am losing out as I am not getting the childcare subsidies to which I am entitled, money which would enable me to take my son to more sessions with his therapists, or pay for extra support. I feel I should give up and use childcare vouchers.’

She added, ‘The Tax-Free Childcare website has had copious defects and displayed misleading error messages. As a professional software tester, who is paid to assess the quality of web services and software, this became painfully apparent during my four attempts to sign up to the scheme.’