Paper chase

Support for employer-assisted childcare is a key plank in the Government's raft of family friendly policies aimed at encouraging parents into work and enabling employers to retain high-calibre staff.

Although employers can help their staff with their childcare in several ways - for example, by providing a workplace nursery or by contracting directly with a childcare provider - vouchers have become the most popular form of assistance. However, while more and more employers and their staff are enjoying the benefits that come with vouchers, the early years sector is struggling with the bureaucratic burden of processing them.

'A typical nursery can be redeeming vouchers from as many as a dozen different companies,' says Purnima Tanuku, chief executive of the National Day Nurseries Association. 'And each one has a different system.

'We welcome childcare vouchers as they help parents to access quality childcare - at the NDNA, we provide our staff with vouchers - but we have some issues with them.

'Some voucher companies have complex systems and nurseries can find that payments are late or have been missed altogether, which can affect their cashflow.

'This sector operates on very tight margins, so if payments are late, it can impact on the viability of the nursery. It can also put a strain on the relationship between the nursery and the parent, if the nursery is constantly chasing the parent over late payments of vouchers.'

Growing numbers

The extension of the tax and national insurance exemptions in last year's Budget from 50 to 55 a week, saw an explosion in both the uptake of vouchers and the number of companies offering them, according to Thom Crabbe, head of projects at the Daycare Trust.

'The Government anticipated 100,000 taxpayers would take advantage of the extension in exemptions in last year's Budget, but that has been exceeded,'

he says.

Unofficial estimates put the figure nearer 110,000. HM Customs and Revenue has commissioned a survey to determine accurate numbers and, according to a spokeswoman, will publish the results later this year. It will also launch soon a vouchers/tax credits calculator to enable parents to decide which is the better option for them.

Mr Crabbe says the numbers of parents using vouchers continues to grow.

'Most of us now work for small employers. A small employer, who has a valued staff member wanting help with childcare costs, will look for ways to help.

'The voucher market has become very competitive. We get a lot of calls from employers wanting to set up voucher schemes and very few from people interested in running workplace nurseries. In calls to our helpline, vouchers are the single biggest issue.'

The process of setting up fee payments via vouchers can be complicated, says Bel Oomerjee, proprietor of the Ultimate Day Care nursery chain, based in east London.

'Parents do not always provide all the information we need and we can spend a lot of time chasing about to get it. But once things are in the system, they seem to be quite straightforward,' she says.

But the finance officer of another London chain, who wished to remain anonymous, expressed her disbelief that the sector was prepared to accept the administrative burdens of processing vouchers.

'It is ludicrous. You cannot batch vouchers but have to key in the entire reference number, which can run to around 20 digits, for each voucher. When someone is paying their fees with a series of vouchers you have to record each one. There has to be a simpler system to pay us,' she says.

Ms Tanuku adds, 'We would like to see consistency and guidance from the Government on how schemes should operate. Nursery owners are reluctant to take matters up with employers because they appreciate the benefits brought by vouchers, but we suggest they should take up their difficulties with voucher companies, parents and their employers.

'Employers should not just sign up to voucher providers and forget the whole issue. They need to review that the voucher scheme is working well for their staff and talk to the childcare providers.'

Industry standard

Mr Crabbe says, 'Maybe we need to set an industry standard for voucher companies. Some companies have come from the childcare sector or have a background in vouchers, but the impression is that some others have entered the market because they see it as a reasonable earner. It may well be that they will fall off fairly quickly.'

John Woodward, a director of Busy Bees, agrees. 'There should be an industry standard. In any type of emerging sector, you do need to police it a bit.'

There is even confusion in the advice to employers. Sandra Hutchinson, proprietor of Primley Park Nurseries in Leeds, says, 'We have a member of staff who wants to be part paid in vouchers. The Revenue says I should go to a voucher company and buy vouchers for them to give to me to give to her. She will give them back to me as her childcare provider. I send them back to the company and they pay me' (see box).

In fact, employers can bypass voucher companies and run their own schemes and the Daycare Trust publishes a leaflet explaining how to do this. But Mr Woodward says it is not worth it. 'We charge an administration fee of 7 per cent. For the average voucher of 240 a month it comes to about Pounds 20. It would probably cost you more if you added up your time and effort.'

PRIMLEY PARK NURSERIES, LEEDS

Sandra and Malcolm Hutchinson, who own the Primley Park nursery chain in Leeds, are paying a heavy price for their support for childcare vouchers: Pounds 12,000 a year by their estimate.

'Forty per cent of our parents use vouchers,' says Sandra. 'I did a real push on vouchers when they first came in and wrote a paper for parents on how to get them.

'The concept is great. The trouble is as more people sign up, more voucher companies come on the scene and the administrative burden on us is growing.

Across our three nurseries, we are dealing with 14 different voucher companies, each with a different administrative system.

'We are chasing payments right through the month. Malcolm used to reckon to have the fees all sorted out, at the latest, by the seventh of the month.

Now it can be the 22nd or later. We are still waiting for vouchers to come through when we are processing the next month's invoices.

'We have 280 children at our three nurseries. Malcolm reckons his workload has doubled with vouchers. We have taken on a part-time administrative person just because of vouchers and reckon that it will cost us 12,000 when you count all the employment costs.

'One parent, for example, pays us 646 a month in vouchers which comes to us in six 100 vouchers, four 10 vouchers and six 1 vouchers. Each one has to be recorded, so that is 16 sets of numbers to be recorded to receive one payment. Then we have children where both parents get vouchers.

'It varies as to how quickly we are paid. Some systems are simple; some are not. With paper-based vouchers, you have to ring a freephone number to redeem them. You have to set aside time to make the call. For another one we have to post off the voucher and they post back a cheque. Another pays the money straight into our account but does not reference it so we never quite know where the money has come from.

'It may sound pernickety but the parents are saving money, the employers are saving money, the voucher companies are making money and we are processing the vouchers and getting nothing. I want to see us getting an administration or processing charge.'