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    • Flickering Ember
    • By Flickering Ember 4th Aug 09, 11:58 AM
    • 11,644 Posts
    • 128,881 Thanks
    Flickering Ember
    • #2
    • 4th Aug 09, 11:58 AM
    • #2
    • 4th Aug 09, 11:58 AM
    I think firstly, try to spread awareness by writing some sort of article on the main MSE website, and linking to it in the email, explaining clearly that it shouldn't deter people from applying for the benefits to which they're entitled, basically explain it as you already have done.

    Continue to badger Ed Balls (in the nicest possible way).

    This point you made "Paying by voucher should be neutral at worst. If the above doesnít work, it should be incorporated into the system that there is no way you could be worse off if you use vouchers (ie the lost of tax credits is no more than the gain from vouchers) at least it would mean those who didnít realise werenít actually losing out." I think that is the one which is most likely to get a positive response and it's also definitely common sense (not having a go at you, more surprised that the people who should have seen this before never thought of it in the first place and prevented it from happening.)
    Flickering Embers grow higher and higher...I need a break and I wanna be a paperback writer!
  • mikki-b
    • #3
    • 4th Aug 09, 2:40 PM
    Child care vouchers
    • #3
    • 4th Aug 09, 2:40 PM
    In my previous job, I badgered my employer (ironically a government body) for 3 years to introduced the voucher scheme, getting the union involved as well. They kept coming up with excuses not to do it and every time I would go away and investigate their claims and come back and rebuff them.
    After 3 years, they finally came round and I was invited to be the employee representative tasked with deciding which voucher provider we would use. I seem to remember all off them mentioning that people should consider the effects in their tax credits before joining the scheme and should contact their tax office for advise, simply because, as Martin says, its a complex system.
    The month the company started the scheme I actually left so got no benefit from it, but my new employer had the scheme running already and again in their info they say much the same thing. However I guess a lot of people don't really think about the effect. Since we don't qualify for tax credits, its never been something I've really thought about.
  • WelshGandalf
    • #4
    • 4th Aug 09, 11:39 PM
    • #4
    • 4th Aug 09, 11:39 PM
    How about money for childcare costs if there are 2 parents and one of them stays at home to look after the kids?!
    • Flickering Ember
    • By Flickering Ember 5th Aug 09, 6:30 AM
    • 11,644 Posts
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    Flickering Ember
    • #5
    • 5th Aug 09, 6:30 AM
    • #5
    • 5th Aug 09, 6:30 AM
    How about money for childcare costs if there are 2 parents and one of them stays at home to look after the kids?!
    Originally posted by WelshGandalf
    You mean along the lines of a variation on carers' allowance. I think it's a good idea. I was actually returning to this thread, on the back of reading some other horror stories on the Benefits board, because I think that too many people these days breed but do not actually parent their children. The amount of semi feral youths knocking about in my area, with appalling manners and a lack of respect. I think that the job of being a parent is an important one, and also psychological studies show that kids who spend time with their parents and are nurtured do better in life than those who are ignored or palmed off onto other people. By returning to work, one parent (in the case of a couple) would be likely to claim tax credits and this voucher scheme for childcare. It could work out cheaper, in fact, to let the parent stay at home and just pay them some sort of means tested benefit. Then again, that could end up penalising those who WANT to return to work. Maybe operate the system as above until the child reaches primary school age, and then an improved tax credits system would take over.
    Flickering Embers grow higher and higher...I need a break and I wanna be a paperback writer!
  • Tom Shea
    • #6
    • 5th Aug 09, 6:32 AM
    Consolidation not communication
    • #6
    • 5th Aug 09, 6:32 AM
    This is an area fraught with complex and difficult issues. While the Government is committed to assisting it is becoming so complex and fragmented.

    The sources for assistance are even more complex - so apologies for below and I will try to keep it simple:
    1. Parents can get £243 EACH as part of their benefit - aids higher earners as relief is greater AND is better for couples over single parents. - MOST use vouchers (it can be done other cheaper ways) which are paid to their carer - for providers its complicated and can cause cash flow problems.
    2. Tax Credits are paid to parents and then passed on to their carers - but its based on the last years employment and current childcare - it is paid in arrears - where most childcare is paid as you use it or in advance - given TC are aimed at lower income families this can cause problems with cash flow (and sometimes there is a temptation to use the cash coming in to meet other immediate needs and this then causes both parent and carer problems)
    3. At 3 - or even 2 now - parents can access 12.5 hours (and possibly 15) hours for 38 weeks (as it fits the school terms) 'free' nursery education which can be provided by their carers - who then receive £3 (ish) on average and hour for their care - but it is received from the Local Authority - who often pay a bit up front and a bit in arrears - based on a paper trail....
    4. Care 2 Learn provide some assistance - which is provided direct to providers to support learners - but soem will only pay IF THE PARENT ATTENDS COLLEGE so if a college places a child with a carer - but then the parent doesn't attend - they don't pay.....
    5. DWP does assist sometimes - similar issue about return to work
    There are more complexities - but I hope this illustrates the folowing point.

    If we are really trying to improve the quality of the care we give the child so that they can be given the best start - the funding needs
    1. to be clear - so anyone can access it
    2. given through one route - so it is clear what can be got and it goes to the carer not via a third party (voucher company - parent - Local Authority - Government Department)
    3. simple to access - so that the minimum time is spent on administration and the maximum time on caring for children.
    The Goverment will say its too complex to do - well for childcare people - childminders, small nurseries, childrens centres - to have one parent with five different methods of 'paying' is difficult - give a childminder five children or a nursery or children centre 60 children and it is a complex administrative nightmare....

    A single payment direct to the provider based on a simple usage is too easy - and I suspect most would be happy to wait or help drive this through....

    (PS I just heard of an employer CHARGING 3% to an employee for introducing childcare assistance!!)
  • stingylolo
    • #7
    • 5th Aug 09, 6:44 AM
    • #7
    • 5th Aug 09, 6:44 AM
    Thanks for fighting the side of the parents, children do have an impact on the finances, so it should be made easier to find out what help your are entitled to and in what way. Thing is, the tax credit system is so obscure, and so prone to errors, that you can't work out anything. It would be nice for the government to have a clearer system, so that you know how much you are entitled to and you can play with the figures etc so you can make the choice that is best for you. That way, you can see if you're being done (after all you don't know if what you're getting is right) or you avoid the commoon problem of having been overpaid because you don't know what you should have had in the first place. TBH when you send a letter notifying them of a change in circumstances it takes three rounds to get it right, and you get sent 6 notification forms etc it's such a waste of time and energy !
  • nemma
    • #8
    • 5th Aug 09, 8:07 AM
    • #8
    • 5th Aug 09, 8:07 AM
    I have tried on numerous occasions to find out what help I can get with childcare from the tax credits office. It appears to be easier to get blood out of a stone than to get a simple "yes you would get blah blah help on such and such and ncome"
    The general answer I seem to get is " we cant tell you until you are actually workng as we have to change your income details and then work out a new claim"
    Bascally, start workng and accept a job before you find out if your eligable. this isnt acceptable, I WANT to go back to work but wont take a contract until I know that I will be able to afford childcare.
    Tax credit allowances seem to be plucked from the air constantly, we are constantly in arrears even when we call the office to let them know a chane in circumstances.
    A definative banding system needs to be introduced for the amount of help you get for every £1000 income! Surely that cant be too hard?
    At the minute its hard to trust a ssystem where even the staff dont seem able to how they work out tax credits!!!
  • secretshopper
    • #9
    • 5th Aug 09, 8:24 AM
    • #9
    • 5th Aug 09, 8:24 AM
    As a person with a relative who owns a private day nursery, the problem I have is that the tax credit not paid directly to the childcare provider. I have heard of numerous cases where parents are claiming the money, bringing the child to nursery, and then not paying the fees and either claiming they canít afford it (even though they have the government's money) or disappearing altogether to pull the same scam on another nursery. Childcare providers shouldn't have to be calling in bailiffs to claim back money that is rightfully theirs!
    Nice to save.
    • bylromarha
    • By bylromarha 5th Aug 09, 8:41 AM
    • 9,960 Posts
    • 13,248 Thanks
    bylromarha
    I think the idea above is an interesting one, and maybe worth option 4?

    i would be extremely happy for my childcare tax credit to go direct to my childminder and I pay the difference.

    If money goes direct to the childminder, then I would not be eligible to buy vouchers. No extra expense for government.

    If income is above tax credit threshold, then voucher scheme is applicable to pay for childcare.

    As a stop gap solution, can a leaflet be written that gives simple figures of where tipping points are? Or maybe tax credits can be trained to talk to those who intend to claim vouchers as well and ask the right questions to ensure the person gets the best result for their situation? Like the blog says, having 2 bodies doing this is not helpful and it isn't in the voucher issuers interest to tell you the best situation for you.

    No easy solution. But having a meeting with someone in government who can make changes is a good step forward. Martin is the Jamie of the financial world!
    Who made hogs and dogs and frogs?
    • lynneinjapan
    • By lynneinjapan 5th Aug 09, 8:52 AM
    • 384 Posts
    • 169 Thanks
    lynneinjapan
    As a person with a relative who owns a private day nursery, the problem I have is that the tax credit not paid directly to the childcare provider. I have heard of numerous cases where parents are claiming the money, bringing the child to nursery, and then not paying the fees and either claiming they canít afford it (even though they have the government's money) or disappearing altogether to pull the same scam on another nursery. Childcare providers shouldn't have to be calling in bailiffs to claim back money that is rightfully theirs!
    Originally posted by secretshopper
    Landlords are in exactly the same situation now that the way Housing Benefit is issued has been changed (though that's a separate gripe entirely!). But when it's payment for the place you live, there's normally only a single monthly rent payment involved and that's unlikely to change more than once a year, whereas with childcare a parent might be using a nursery for a couple of days a week and a childminder at other times, and the hours (and therefore fees) are likely to vary depending on the time of year, so making payments directly to childcare providers would be more complicated.

    Not saying that I don't appreciate your point though!
  • micky 101
    what about students??
    As a full time student who's partner works full time, I need childcare but am not entitled to any help with the costs. The help avaialable to students needs seriously looking at. I am entitled to a full maintenance grant to help with basic living costs whilst I'm a student, so clearly student finance recognises that the family has a low income, however tax credits take no account of one parent being a student - both have to be working a minimum of 16 hours top qualify for help with childcare. Sadly if the cost of childcare becomes too difficult to manage I may have to give up my course and then be stuck at home as an unemployed person .
  • Monkeylady
    Thankyou for taking this up Martin! I started claiming tax credits last year when my baby was born and it was a complete nightmare! I only found out 6 months later that I was entitled to more as it was worked out on last year's income, which was considerably higher than the maternity pay I was then receiving. As for childcare I've still been unable to work out if we would be better off with vouchers or tax credits. For the time being I'm sticking with the vouchers as it's just easier than faffing any more!!

    I don't understand why it has to be so complicated. Obviously everyone's situation is different but thresholds of income vs. tax credit eligibilty would be really helpful!!!
    MFW
  • samandmillie
    Interesting article. Is there an easy way to find out whether I would be better off if I opted out of the current childcare voucher scheme that I take part in?
    Thanks
  • PPO
    It's insanity we simply need to make it automatic, not paperwork, which costs more to administer than they pay out. If you turn up with your child that's evidence that you need childcare surely.
    Funny how we managed it in the war when we worked every able bodied mother for the war effort.
    • Flickering Ember
    • By Flickering Ember 5th Aug 09, 11:36 AM
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    • 128,881 Thanks
    Flickering Ember
    It's insanity we simply need to make it automatic, not paperwork, which costs more to administer than they pay out. If you turn up with your child that's evidence that you need childcare surely.
    Funny how we managed it in the war when we worked every able bodied mother for the war effort.
    Originally posted by PPO
    While I agree it should be automatic; after all, I got sent a National Insurance card around the time of my 16th birthday without requesting one, there would be some effort involved as they'd need to check the child hadn't died, or moved abroad, or been taken into care, or hospitalised, etc as this would affect the benefit rate. And of course, some people would just borrow someone's child, take them in and pretend it is their own offspring, so it would have to be more than that.
    Flickering Embers grow higher and higher...I need a break and I wanna be a paperback writer!
  • Peter5415
    As others have already pointed out, the complexity is probably the entire problem.

    Considering child tax credits first - this is run by HMRC, but from a department which acts as though it is entirely ignorant of the HMRC which deals with taxation. More or less all of the information involved in running tax credits is already supplied by parents when completing tax returns and yet we are asked to complete another form asking much the same questions but in subtly different ways.

    To my mind, there is no reason why HMRC couldn't calculate tax credit entitlement directly from income tax returns since the government clearly knows who has which children in order to run the child trust fund scheme. Whether the administrative saving would even out with the increase in monies paid out is something I am unable to calculate but it strikes me as a morally dubious approach to offer benefits but only to those who both find out about them and have the ability (and energy) to apply for them.

    Maybe this is naive and, if all parents claimed everything they were entitled to, then the system would go bankrupt - in which case we should be told openly that the costs are being kept down by discouraging potential claimants by the weapon of unnecessary bureaucracy.

    Secondly, considering childcare vouchers, this might sound like a stupid suggestion but is there any reason why parents could not claim £243 per month from their gross salary through their annual tax return? The tax advantage could then be sorted out through the tax code in the same way as countless other items which can be paid for from gross salary (e.g. membership of professional organisations, mandatory insurance schemes, etc).

    This would remove the unnecessary bureaucracy of childcare voucher companies - do they really add anything except an ability to extract some money for themselves? Additionally it would clear up the strange side effects of taking childcare vouchers, e.g. risks of receiving reduced maternity pay, smaller apparent income when being considered for a mortgage, etc.

    There would, no doubt, be abuse of this scheme but I assume there is also abuse of the tax breaks for professional memberships, the tax breaks for company cars, etc, etc. However this could be solved by HMRC requesting the production of receipts, as with other expenditure. Again, a tremendous increase in efficiency.

    By making the 'voucher' scheme an adjustment in tax code and arranging for tax credits to be calculated automatically with information that HMRC already has, it would be impossible for anyone to be made worse off unless the government decided to place traps into the scheme.

    I confess I have a personal hatred of the implementation of both of these schemes. While the government clearly had its heart in the right place, I do wonder whether the mechanisms were set up in this way to dissuade some from applying. Personally, we lost out on several months of child tax credit because we didn't realise we were eligible - the information was in a pack which our health visitor failed to give us at the birth of our child. When we finally found out about it, HMRC refused to backdate more than three months because those were the rules, which I considered mean-spirited to say the least.

    We additionally lost out on a few months tax advantage from childcare vouchers because our forms were lost in the post. Since the employer/voucher provider were excruciatingly slow in processing anything it took us a while to realise what was going on and start the whole business again. Interestingly, we have a new employer now but the old one continued happily paying £243 per month to the voucher provider, despite the fact that there was no salary to take it from. We asked them to stop as soon as we became aware but it shows how unnecessarily fiddly the whole business has become.
    • Former MSE Wendy
    • By Former MSE Wendy 5th Aug 09, 11:42 AM
    • 868 Posts
    • 1,782 Thanks
    Former MSE Wendy
    Interesting article. Is there an easy way to find out whether I would be better off if I opted out of the current childcare voucher scheme that I take part in?
    Thanks
    Originally posted by samandmillie
    http://www.hmrc.gov.uk/calcs/ccin.htm this might help samandmillie. It's a HMRC 'Childcare Indicator' calculator. Whilst unlikey to be 100% correct it should be able to give more of an idea on whether vouchers or credits are better for you.
  • UnCS
    Ed Balls' reply to my Childcare agitation. Suggestions needed.
    What do you think is a realistic outcome from this meeting?
    is it
    a) action to address the need for people using vouchers to understand the implications for tax credits
    b) agreement to a specific policy change or
    c) agreement by the minister that this is an unintended consequence of the policy and agreement to look for a solution?

    I'd suggest concentrating on a) and c) rather than advocating a particular solution. This will be easier to achieve in one meeting and leave the door open for continuing discussion with the department about the issue. If the minister cannot agree that this is not what was intended then they are not going to make any changes anyway. in these circumstances it would be better to concentrate on getting agreement to improve awareness amongst tax credit applicants and have a discussion about change of policy with an opposition party. Probably worth doing this anyway - and being open about your intentions to do so.
    • hossa25
    • By hossa25 5th Aug 09, 11:56 AM
    • 20 Posts
    • 109 Thanks
    hossa25
    Hi Martin

    I consider myself to be pretty ok when it comes to understanding money issues, but the childcare tax credits scheme has me baffled.

    All I do is ring them when anything changes & whenever I get documentation and have them talk me through what they need to know from me as I can't face their paperwork, or understand their calculations, my money then goes up & down in a way that is a bit of a mystery.

    My thought is that I think the companies providing childcare vouchers need to be made to take more responsibility somehow when you sign up to their scheme - when I signed up for vouchers I don't recall any mention of the impact this might have on tax credits, certainly no one talked me through the pros/cons, so now I have no clue whether I should carry on with them or not.

    The first I realised was when I called tax credits recently (upon getting renewal pack) to tell them I was paying for childcare, but when I said it was using vouchers they just said they weren't interested as I was already getting benefit from vouchers, so they weren't listed on my records (other than as a lower income generally). That was when I realised I could have paid normally and maybe got more relief from tax credits. But left with no clue on how to easily find that out!

    Very confusing! Anyway, hope this meeting goes well!

    Debbie
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