Parents' debts hit providers' pockets
Simon Vevers
Wednesday, April 7, 2004
Childcare providers are increasingly being left with bad debts and sustainability problems because many parents are facing 'an affordability gap' and cannot pay the fees in spite of receiving tax credits. Rosemary Murphy, chief executive of the National Day Nurseries Association, said that the Government's 70 per cent maximum limit for help with childcare costs, reduced funding for the second child and none for the third, left the poorest parents 'with a significant amount of money to find each week'.
Rosemary Murphy, chief executive of the National Day Nurseries Association, said that the Government's 70 per cent maximum limit for help with childcare costs, reduced funding for the second child and none for the third, left the poorest parents 'with a significant amount of money to find each week'.
She warned, 'There is a clear knock-on effect for childcare providers.
Parents take their children out of nursery because they reach a crisis point, leaving the provider with bad debt and sustainability problems.
'We urge the Government to build on the initial success of tax credits by raising their value to low-income families, particularly with more than one child.'
One nursery affected is Smiley Faces in King's Heath, Birmingham. Pauline Gunn, who runs the nursery, ended up 2,000 out of pocket after agreeing to care for two children on the understanding that she would be paid the fees when their child tax credit payments came through.
However, one of the parents received 1,400 in back pay from the Inland Revenue and then spent the money elsewhere. Ms Gunn said she went to the small claims court but neither of the debtors has come forward with a proposal to pay her.
She wants the Inland Revenue to pay money for childcare direct to providers. 'I'm not happy being effectively the Inland Revenue's debt collector. Losing this money means this year we have 2,000 less to spend on equipment for the nursery,' she added.
The extent of debt problems faced by families on low incomes was underlined last week in a report by Sarah Bridges and Richard Disney of the Experian Centre for Economic Modelling at Nottingham University. They found that low-income earners without a job or their own property who used a range of credit sources, such as catalogues and mail order, were more likely to face debt problems than homeowners or credit card holders. More than 40 per cent of lone parents and 30 per cent of low-income couples with children were behind with bills for household utilities and services.
