Alliance calls for childcare policy rethink as new figures show only one in six eligible families use tax-free childcare
Leading early years membership organisation the Early Years Alliance said that government must “seriously consider” the future of the tax-free childcare policy, as new HMRC statistics show that less than one in six eligible families are using a tax-free childcare account nearly three years after the launch of the scheme.
According to , only 204,950 families were using tax-free childcare accounts as of December 2019. HMRC has previously estimated that around 1.3 million families are eligible for the scheme.
Tax-free childcare was launched in April 2017 and allows eligible parents using a government account to save towards childcare costs to receive a government top-up of £2 for every £8 saved.
Commenting, Neil Leitch, chief executive of the Early Years Alliance, said:
“Tax-free childcare has been a flawed policy from the very beginning.
“As its core, it’s completely regressive, as the more money a parent can afford to save towards childcare, the more support they receive from government.
“Add to this the seemingly endless technical glitches the scheme has suffered since its inception, and now the fact that less than one in six eligible families are actually using a tax-free childcare account, and it’s clear that the government needs a complete rethink of its childcare policy priorities.
“At a time when the so-called ‘free’ childcare offers are crying out for increased funding, it beggars belief that the government is continuing to plough money into a scheme that is reporting continually low levels of take-up, and that offers minimal benefit to the families that need the most support.
“As such, we urge the government to undertake an urgent review of this policy, and seriously consider whether this is money that would be better spent elsewhere.”
In November 2018, Labour analysis of data from the Office for Budget Responsibility found that spending on tax-free childcare was projected to be £600m less than originally expected, with this underspend returned to the Treasury rather than re-invested into the early years sector.
- The Early Years Alliance is the largest and most representative early years membership organisation in England. A registered educational charity, it also provides high-quality affordable childcare and education to support children and families in areas of deprivation throughout the country.
- The Alliance represents 14,000 members and supports them to deliver care and learning to more than 800,000 families every year. We deliver family learning projects, offer information and advice, produce specialist publications, run acclaimed training programmes and campaign to influence early years policy and practice.
- The Alliance website is