Latest Public Sector News

31.07.14

NS&I to operate government’s Tax-Free Childcare accounts

Public sector provider National Savings & Investment (NS&I) has been selected by the government to operate its Tax-Free Childcare accounts, working with HMRC.

Following a consultation on the delivery of childcare accounts within the Tax-Free Childcare scheme – which the government is committed to introducing in autumn 2015 – the Treasury said that the NS&I option had “real and particular advantages in terms of simplicity for parents and childcare providers”.

However, the decision has come under fire from the Childcare Voucher Providers Association (CVPA), which claims that the decision does not reflect due process to ensure value for money for the taxpayer.

Childcare accounts will be central to the delivery of the government’s Tax-Free Childcare scheme, as they will act as an intermediary between parents and childcare providers.

Announced at the 2013 Budget, the scheme will be available to nearly two million working families. Eligible parents – those in a household who are in work, with income less than £150,000 a year, and are not already receiving support through tax credits or Universal Credit – will be able to open a childcare account online; pay money towards their childcare costs into that account; and have the payments topped up automatically by the government at a rate of 20%, up to an annual cap of £2,000 of government support per child.

But, prior to the government’s decision on appointing NS&I, a CVPA survey of more than 23,000 parents and 700 childcare providers revealed that 64% of parents believe a choice of private sector providers would be more likely to ensure the scheme operates in a timely, hassle-free manner than if the scheme were run by a single, public-sector provider.

A CVPA spokesman added: “This is a hugely disappointing and worrying decision for parents, childcare providers and anyone concerned about ensuring value for money for the taxpayer. It also raises questions about the government’s commitment to maintaining transparency in its procurement practices.”

In its defence, the Treasury stated the government considered that the NS&I option had real and particular advantages in terms of simplicity for parents and childcare providers, “offering security for parents through a trusted brand with all funds guaranteed by the government, and speed of delivery”.

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