Brown raises childcare allowance

Gordon Brown’s decision to raise the value of employer-provided childcare vouchers, exempt from tax and National Insurance, from £50 to £55 per week in the Budget has provoked a mixed reaction.

The new rate will apply to all employees from 6 April, except for those in salary sacrifice schemes where the agreement restricts changes part-way through the contract period.

Cheryl Curtis, benefits manager at KPMG, said the increase is not enough. "The cost of childcare is incredibly high, and our staff are spending much more than they are getting discounts on. In the future, we hope the government allows realistic increases that reflect the rising cost of childcare in this country."

Daycare Trust has also expressed disappointment in the move. Beth Reid, campaigns officer at the charity, said: "The £5 increase will only make a small amount of difference, and we would like to see a total review of long-term childcare funding."

Yet providers of childcare schemes have reacted positively to the changes. John Woodward, managing director at Busy Bees, said: "It is very encouraging. It gives working parents even more choice and demonstrates the government’s commitment to childcare."

The government has also decided to make available capital grants for small- and medium-sized companies to fund workplace nurseries.