Gordon Brown under pressure to rethink plans to scrap tax breaks on childcare vouchers

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%.

Last month, voucher providers met to discuss the best way to fight the government’s proposals.

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.”

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