Gordon Brown faces mounting pressure to reverse his plans to scrap tax breaks on childcare vouchers, after nine former Cabinet ministers wrote to the prime minister demanding a rethink.
The MPs warned that stopping the benefits could hinder parent’s chances of returning to work during a recession, adding the move could cost Labour votes.
The letter comes after more than 60,000 people have already signed a petition on the Downing Street website, and 43 Labour MPs have backed a House of Commons motion warning that scrapping the benefits would worsen the gender pay gap – which stands at a median figure of 12.8%.
The exemptions, which cost the UK £500m per year, are worth up to £900 for a basic rate taxpayer and £1,200 for a higher rate taxpayer. For every employee who joins a childcare voucher scheme, employers save up to £373 a year.
At the Labour Party Conference earlier this year, Brown announced the funding would instead go towards free nursery places for 40% of two-year-olds, so that 250,000 children will benefit by 2015-16.
Patricia Hewitt, Estelle Morris, Hilary Armstrong, Beverley Hughes and Caroline Flint are among the signatories on the letter, the Guardian said.
The letter said: “Childcare vouchers are an essential support to over 340,000 parents enabling more than 33,000 employers to help their employees, especially women, balance family and work responsibilities.”
It added: “Withdrawing them will penalise a significant number of lower-rate taxpayers, reduce the overall amount of funding available for childcare, reduce parental choice and impact negatively on the economy as the UK moves towards recovery.”