Childcare tax breaks revolt growing
Updated on 11 November 2009
A Labour revolt over plans to scrap tax breaks on childcare vouchers is mounting after a group of senior MPs called for a rethink.
In a letter, the critics - including nine former cabinet ministers - warned the move could jeopardise efforts to tackle the recession and cost the party crucial votes.
More than 60,000 people have already signed a petition on the Downing Street website demanding Gordon Brown reverse the proposal.
And 43 Labour MPs have backed a Commons motion warning it would worsen the gender pay gap, reduce opportunities and incentives for two parents to work, impair the quality and affordability of childcare and remove a key source of income for nurseries and childminders.
The move, which would fund means-tested free childcare for less well off families, was among initiatives announced by the Prime Minister in his speech at the Labour Party conference.
Patricia Hewitt, Estelle Morris, Hilary Armstrong, Beverley Hughes and Caroline Flint are among the signatories on the letter to the Progress think-tank, the Guardian said.
"We believe the Government must look again at the decision, carefully considering the full impact of removing the tax relief on parents, employers and the childcare sector," they said.
"Surely this is not the time for us to remove a key support from hard-working families at the very point we need them at their most engaged and productive to fuel the recovery from recession. Crucially, in the run-up to an election, it will remove support for working parents and for businesses in key marginal constituencies."
At present, working parents can make significant savings on the cost of childcare by opting to receive £243 of their monthly pay in vouchers before income tax and National Insurance is deducted.
Mr Brown said no new entrants would be accepted to the scheme after 2011, while the tax relief would end for all people still receiving the vouchers from 2015. The money saved through ending the scheme will instead be used to provide 40% of two-year-olds with 10 hours of free childcare a week on a means-tested basis.
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