27th November

Nurseries Lack Fraud Protection
A loophole in the tax credit system is forcing childcare providers to take parents to court over unpaid fees.

A fundamental flaw in the childcare element of the Working Tax Credit system means early years providers are unprotected by the Treasury's rules around fraud, CYP Now has discovered.

The loophole is forcing settings to chase unpaid fees in small claims courts, where they are often awarded meagre monthly repayments in place of full compensation.

Nursery owner Anne-Marie Paul allowed a parent to run up a bill of more than £7,000 in one of her settings in Romford. The parent proved she was awaiting delayed tax credit payments by calling HM Revenue and Customs (HMRC) - which delivers the Treasury's policies - from the nursery, but eventually pulled the child out of the nursery leaving the fees unpaid. Paul reported the fraud to HMRC but was told the parent had not broken any rules.

"They said that because the parent had accessed the childcare it wasn't fraud because it was her choice whether to pay that money to us, and down to us to take civil recovery for non-payment," said Paul.

A spokesman for HMRC said: "Non-payment of bills is a commercial matter between the provider and the parent."

Romford MP, Conservative Andrew Rosindell told CYP Now: "Unfortunately, Paul fell victim to a loophole in the national law practised by the Treasury and it is with regret that I was unable to help her further."

Like many providers who have had negative experiences with tax credits, Paul believes the small claims court is often an unproductive route, as it is difficult to prove parents can afford the fees. "We will possibly issue a county court summons, but if the person is on benefits I am unlikely to recover any more money," she said.

Tina Jones, manager of Tiny Tots Day Nursery in Prestatyn, Wales, said she has dealt with a number of similar situations. "There is a huge loophole the Treasury needs to consider," she said. "I took one couple to court over £500. They were ordered to repay £20 a month and the next week were on holiday in Florida."

Purnima Tanuku, chief executive of the National Day Nurseries Association, said: "The government needs to consider a move to payments directly to the provider. This would make childcare more affordable and reduce potential for fraud."

Maxine Hill, policy and research manager for the Daycare Trust, said most evidence pointing to fraud was "anecdotal" and that hard research was needed.

source: Ross Watson, Children & Young People Now

14th November

Families Blame Childcare Costs For Financial Woes
A quarter of parents say they won't be able to pay their bills in six months' time, with a significant number citing childcare costs as a factor, according to the latest research from the Family and Parenting Institute.

The report, Families and the Credit Crunch 2008, shows almost one in five parents who felt they would have trouble paying their bills cited childcare costs as a reason. The online YouGov survey questioned 5,309 parents of under-16s across the UK.

Claire James, policy officer at the Family and Parenting Institute, said that feedback from parents suggested childcare costs are limiting their ability to work, at a time when the government has placed an emphasis on ending child poverty and encouraging parents to return to employment.

"It was mothers in particular saying they can't afford to go back to work after maternity leave, or saying it's hardly worth working due to childcare costs," said James.

"Some people would clearly prefer to go out to work but they simply can't afford to," she added.

source: Ross Watson, Children & Young People Now