Clamping down on the misuse of childcare tax credits

Sajid Javid, Minister in HM Treasury, confirmed in a written reply to a York Outer MP Julian Sturdy, dated 13 November 2012, that the government had no intention of paying childcare providers directly the childcare element of the Working Tax Credit, saying: “This support is intended to facilitate parental employment and, for this reason, is most effective when paid directly to parents rather than to childcare providers. Parents are afforded more of the choice and flexibility they need in order to work.”

I would be interested to see what evidence his department has that states paying parents and not providers ‘most effective’. This benefit is only paid if parents have children in registered childcare and is to help pay part of that cost but I know, like many other providers, that this sometimes is the last thing some parents use this for.

Ask any nursery owner/manager and they will all have stories to recount of the excuses used by parents as to what has happened to this money, personally I’ve had garage bills paid, overspent at Christmas and school uniforms as reasons for late payment and this does not include the "they’ve stopped my Tax Credit – I don’t know why" excuse!

I believe that HM Treasury is aware of the abuse within the system, as Javid continues: “However, these funds are expected to reach childcare providers. HMRC is keen to involve childcare providers in helping them tackle error and fraud, and has set up a Childcare Providers Hotline on 0845 300 3941.  This is a dedicated number that childcare providers can ring if they want to report suspected abuse of the system.”

So the problem of late and non-payment to providers by some of these in receipt of Childcare Tax Credits will continue. The minister asks for providers' help to tackle error and fraud but unless a parent volunteers the information that they are claiming Working Families Tax Credits it will only be guesswork on our part as blaming Tax Credits for late or none payment is now seen to be a ready answer when a parent is pressed over bad debit.

Ken McArthur is owner of Polly Anna's Nursery in York