NDNA calls for 'childcare passport' to simplify payment

The organisation said the breadth of current government subsidies and benefits has made the system too complicated and is costing providers money in administration costs. 

It would like to see the government expand its recently set-up online tax-free childcare accounts to include all elements of funding connected to childcare.

This would include money the Department for Education currently sends to local authorities to fund early entitlements for two-, three- and four-year-olds, as well as universal credit for childcare and tax-free credits for childcare. 

Once entitlements are combined, parents would be able to use them how they choose, NDNA said.

NDNA chief executive Purnima Tanuku said it made sense to "consolidate everything into one account".

"At the moment there is an amount of administration involved from a local authority point of view, and for a provider," she said.

"This would cut down administration, so there should be more money going into the account."

She added that by letting funding "follow the child", providers were also more likely to receive funding on time.

"We're hearing of a number of places where even though payments should reach the provider within one month or six working weeks, the reality is very different, because by the time the providers actually get the money it can take up to three months.

"Removing that kind of delay would help providers with their cash flow." 

The idea of a consolidated account to pay for childcare is not new. NDNA called for a similar system in 2016, when it responded to a Cabinet Office review of red tape in childcare. 

Denise Burke, director of United for All Ages, the Good Care Guide and non-executive chair of the Poppy and Jacks nursery chain, worked with think-tank Policy Exchange on proposals for a childcare payment system based on Transport for London's Oyster travel card prior to 2013.

She said NDNA's idea was "a great idea in principle", but it faced practical difficulties to implement. 

"The various funding streams to help pay for childcare come from different sources which will make it difficult to actually administer the childcare passport," said Burke. 

"You would have to go back to basics and simplify the funding streams, define financial help for parents and then look at how the funding can be targeted and delivered to those parents that need it the most." 

NDNA has included the childcare passport idea in its election manifesto for 2017, which also calls for the government to exempt childcare providers from business rates, and ensure funding keeps pace with inflation and costs.