Tag Archives: tory

Childcare Vouchers: What Will the Conservatives Do?

Childcare Vouchers:  What Will the Conservatives Do?

As innovative tax breaks go the one I always loved the most was the childcare voucher scheme.  Now this isn’t just because I was once an enthusiastic recipient (consider my interest therefore declared), it was because I loved the principal of the thing – of all government attempts to socially engineer through the tax system this was the one that hit the mark:

  • Vouchers mean you can assure that the tax-break really is used for the purpose it was intended.  This isn’t money direct in the bank account like every other benefit and government hand-out – this is the right to buy, from pre-tax pay, a voucher for a specific purpose.  Unlike, for instance, child benefit which has nothing to stop you spending your eighty quid a week or whatever down the bookies rather than feeding your child – if you don’t use childcare  you cannot gain any fiscal advantage through the existence of this scheme.
  • These vouchers can only be spent on OFSTED approved childminders or nurseries.  Whilst you and I may, or may not, have philosophical reservations about the burden OFSTED places on pre-school providers we taxpayers have now invested a great deal of our money in setting up this inspection regime.  We therefore have a right that we benefit from our investment.  Personally, I would wish for lighter regulation for this age-group, but any regulatory regime is only worth jack if people work within it.   If there are not incentives to work ‘legitimately’ then you will always have people working outside of the regime and a skewed market.  Linking the ability to receive voucher payments to compliance obviously improves compliance dramatically.  This is a good thing.  How we lower the bar of compliance requirements is a debate for another day.
  • Because the money can only be spent on childcare (per above) – you guarantee jobs for tens if not hundreds of thousands in the childcare industry.  Those folk who work at nurseries or as independent childminders  provide a valuable service – and also, obviously, pay tax on the money they earn through receipt of vouchers making the overall cost to the taxpayer less that it may seem at face value (more on this point in a moment).
  • The pre-school providers funded in part through this money are largely private, this gives parents greater choice and a more efficient market bringing overall better quality provision.  This competitive drive for quality can only be in the best interests of our infants.
  • Having private companies administer the back-office side of the scheme kept the administration costs down through competition.  Again, a win for the taxpayer compared with other policy implementations.

It is now a few months since the Labour party scored a whopping own-goal by announcing they would dump this, possibly one of their best implemented ideas.  The first toe-dip in the language of ‘class war’ ahead of the election was probably the branding of this a ‘posh-parent tax-break’.  The spin seemed to be ‘Why should Joe public subsidise the childcare of accountants and solicitors?   We’re in a recession, we have huge debt, this is one area of spend that can go.’

The masses arose.  Web forums like ‘mumsnet.com’ showed a level of digital militancy that caught ministers on the hop.  A U-Turn came.  Of sorts.  In the unlikely event Labour win, the scheme would remain with tweaks.

Dumping the vouchers was a stupid idea on both a political level and for macro-economic reasons.

  • For many so-called ‘middle-class’ women even very high earners, the sheer cost of weekly childcare (well over a hundred pounds a week in most cases) made the choice of going back to work uneconomic without the tax discount.  If woman are not going back to work you get less tax revenue from their earnings – the money forfeited as income tax revenue would likely be more than the amount sacrificed to provide the break.
  • To compound this the fall in demand would inevitably result in a loss of jobs in the child-care industry with a consequent loss of tax income and increase in welfare burden from those child-care assistants impacted.
  • We go on and on about trying to create a society where families make their own choices about the way they balance work/life and that we should shy from the automatic assumption that ‘Mum stays at home’.   Instead we have been angling for a time where mum (or dad) can stay at home if they want to OR if they want to return quickly to their career then there is no monetary barrier to returning to the workplace.  This policy was the enabler of that choice-led ideal.

Admittedly, the voucher scheme did have one valid flaw which does leave it open to charges of unfairness.  The Achilles heel was that it was entirely optional for employers to provide it.  Big forward thinking employers did.  Most small companies, presumably put off by perceived red-tape, did not.   That you do or do not get such a tax advantage depending on your employer doesn’t seem quite right.  The answer though is not to simply close the scheme – no, the answer is to extend it. The take-up level by employees at companies that did offer the scheme was high enough to prove the popular demand.  It cannot be beyond the wit–of-man to empower the private administrators of the scheme to collect national insurance numbers of those buying the vouchers regardless of employers and then providing the data on the actual vouchers bought back to HMRC for future reimbursement through the tax-code or some similar simple innovative solution?  I came up with that with about five seconds thought, it may have flaws – but I am sure bright people put in a room for a few hours could come up with a way that would work.

In all the talk this week of cuts – and I do not dispute the need for very many, very swift, very deep, very painful cuts in public spending– I am still not clear where the Conservative Party stands on this particular area.  I can come up with many ill thought out tax breaks which miss the mark and are ripe for the axe.  This is not one of them.  The Party would be foolish to swing at it.

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Filed under Centre Right, Politics, UK, UK Politics

Million Pound ‘Crowd-Source’ Website: Not as Crackers as it May Sound.

Recently the Conservative Party has been trying to convince the public that it ‘gets’ the internet.  The best example is Maude’s Conference announcement that much more government spending would be published on the net so an army of “armchair auditors” could find the dodgy or wasteful and bring to account.  Make no mistake, it is a cracking idea and should be adopted by every party.

However, there’s a less favourable response to Jeremy Hunt’s recent attempt to move in this space.  Jeremy says a Conservative Government would pay a million pounds to the company that produces a website successfully engaging the public to provide instant feedback on policy initiatives.   It’s an open competition and any company – big or small, can enter. The belief is that the ‘Wisdom-of-the-Crowds’ will help avoid the policy banana skins you fall victim to when in a Westminster bunker sunk in ‘groupthink’.  Labour has given us textbook examples of what needs avoiding – think the ten-pence-tax-band, the Ghurkha saga, Childcare vouchers etc.

Predictably, this idea has been seen by the media as less ‘cracking’ and more ‘crackers’.  In typical discussions on the proposal the word ‘gimmick’ is bandied about freely.  Howls of “X,Y or Z Website already do this” are used to then make the point that the Conservatives don’t even understand what is already out there, “waste of taxpayers money” is another accusation from the Labour camp (irony noted). Without a loud challenge to the naysayers it has the whiff of an own-goal.   It should not have.  This is an idea with genuine merit. The cheap shots are a reaction to the headline without reference to detail.

The devil is, of course, always in the detail.

The inspiration for the ‘competition’ is the fabled ‘X-Prize’ foundation.  This has proven that you can drive innovation (at low cost) through competition.  Its first famous success was a prize for a privately built ‘spaceship’ that could reach orbit.  Now that sounds ‘crackers’! – but it worked.  A small company working in a small hanger in the United States managed what twenty years earlier had taken super-powers significant parts of their GDP to develop and still defeats many nation state-funded space programs today.  With an eye on the prize, an eye on a tight budget, and without the politics and grandeur that stick to state funded programs – they innovated, accelerated and delivered.

The critical success factor was in the detail of what you needed to do to claim the prize.  It wasn’t about drawing up plans for a spacecraft.  It wasn’t about building a mock-up.  It was about building it, launching it and doing it.  In short: delivering it.  No delivery, no prize.  And it wasn’t about a one-off either.  To claim the prize you had to put three people into space, in the same machine, and bring them back in one piece twice in two weeks.  Any cost of failed development was shouldered by the private enterprise – not the taxpayer.

And so it can be with this ‘crowd-source’ government prize.  Get the right criteria in place before the million can be claimed and you have it cracked.   This cannot be about simply knocking up a website with ‘Web 2.0’ or social media features.  It can’t be about just naming the technology or ripping off an existing platform and rebranding it.  No – it has to be about ‘delivering it’.  So to claim the prize, you should have to have something like the following auditable criteria met (I’ve plucked the numbers from thin air by way of example):

  • 250,000 UK taxpayers as registered members.
  • At least 25,000 unique visitors a month for a six month period
  • Mechanism built in to ensure ‘trust’ (perhaps similar to ebay user ratings)
  • Watch system and checks and balances built into identify and catch and attempts to manipulate the system (which defeats deliberate attempts from the judges to manipulate the system)
  • Ease of use (could be demonstrated by requiring 100,000 of your registered users clicking to confirm that they believe the site is worthy of the prize – with any inducements for clicking leading to disqualification)
  • 24/7 uptime of 99.99% over a six month period

And you can add and add criteria to the list.  You could happily have very many websites co-existing for years as they tried to hit all the required performance indicators – the only winner in the development period would be the taxpayer.  It would cost us nothing, the government would be getting the kind of voter input it could only previously dream of and when there is finally a winner it would have a solution they would be far, far cheaper, far more stable and far better user-tested than any other government IT project.  A million pounds really isn’t very much at all in the scheme of Government IT projects.  This could easily represent the biggest taxpayer ‘bang-for-buck’ in recent history.

So Jeremy, ignore the naysayers – press on with this and let’s prove that perhaps the Conservatives really do ‘get’ the internet.  Your success or failure will rest entirely on those claim criteria…. get them right prove the naysayers wrong!

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Filed under Centre Right, IT Policy, UK, UK Politics