New childcare tax break to be announced by the Government today - what do you think?(387 Posts)
David Cameron and Nick Clegg are due to unveil new childcare plans in a joint press conference today, with further detail expected to follow next week.
According to reports, families could be entitled to claim up to £2,000 per child every year from their tax bills, to cover the cost of childminders and nurseries as part of a new government scheme to help families.
The new measures will not be means tested, and will replace the current voucher and allowances scheme.
We'd be interested to hear what you think of these proposed changes, particularly in the light of the changes to child benefit which have been implemented today.
xenia - the comments on milk/food etc are directly in response to the post from lexyma stating that children do not represent an extra drain on the household budget. In my response, I excluded childcare from it, simply because it is so variable - some people will have grandparents to hand who will do it for free, others will be paying private nannies, and every variable in between.
fwiw I think childcare should be dealt with separately - ideally to be a taxable expense.
The telegraph has a good solution to the whole child benefit dilemma, which is to scrap it entirely. But, you then look at personal allowances, because the purpose of a personal allowance is to allow a person to earn a basic subsistence amount before tax kicks in. So if an income is supporting 3,4,5,6 people, it makes sense that they should all have a transferable personal allowance as well.
Then for low incomes, include that amount as part of the universal credit.
They are difficult ethical issues. If we have too many people then we may want to ensure it is so expensive to have them (as in China £10k fine if you have more than one etc) people are put off. If you want them to have 5 per family you will smother them in riches for being a good daughter of Mother Russia.
Childcare costs many in London about £25k to £30k a year out of taxed income so about £50,000 gross income. It might cost for one nursery oplace at the cheaper end £14k of taxed income. Of the mother may give up her £25k a year teaching job. Either way it is by far and away the biggest cost of having children. The extra potatoes they eat is tiny by comparison.
I would certainly not be against abolition of all child benefit (I get none now) and tax credits for that matter (given I get none of them).
The other argument also is that we may want to incentivise high earning women to have babies as their children tend to become high earnig tax payers and not women on benefits. Therefore perhaps give CB only to women who earn over £50k - that would be fun and arguably would meet the state's objective in terms of whose children are likely to pay the most tax.
The unplanned for costs are things like having to take twice as many days off for children's sickness. Having to heat the house /provide food for the nanny. Also when looking after 2 under 3 our nanny needed respite so used some nursery/ creche hours as well.
I think a tax allowance for those on higher incomes, and child benefit to be limited to a certain number of children.
Childcare tax breaks scuppered by Lib Dems
Apparently it's because most women earn hardly anything, not even enough to pay tax (terrible that that is so in 2013 rather than women earning even more than men - we have a long way to go to get equality)... and that full time working women who with their husbands pay half each of say a £30k full time child care cost would benefit most from a break of tax relief for that cost. Why should they not? What do we continuously protect those who work not very many hours when the squeezed middle work 10 hour days plus often 2 hours commute to keep the part timers in their benefits?
Generous tax breaks to help working parents to pay for childcare have been scuppered by the Liberal Democrats, The Times has learnt.
The news will disappoint higher-paid mothers who lost their child benefit this month. They had been hoping to recoup part of the loss. Reports had suggested that the tax breaks could be worth up to £2,000 a year.
The plans have been abandoned because wealthier families would benefit the most. Mothers earning less than £8,105 do not pay tax and so would not be eligible, while thousands who receive tax credits would be excluded.
At a meeting this week of the coalition quad David Cameron, Nick Clegg, George Osborne and Danny Alexander the Lib Dems insisted that helping these lower-paid families had to be a priority for any extra cash. Many have already been hit by a cut in child tax credits that increased their childcare bills by 10 per cent a week.
The two sides remain deadlocked over what a new childcare subsidy should look like, so the announcement has been put off. It had been pencilled in for last Monday, but is now unlikely to come until the end of the month.
However, details may soon be announced of sweeping deregulation of nurseries and childminders, a move that ministers hope will lead to lower prices. Under the reforms, childminders could be allowed to look after up to five children instead of the current limit of three, and staff ratios at nurseries would be lowered. There are, however, caveats about the type of experience and training required for those allowed to look after more children.
A source close to the negotiations said that the red line for Mr Clegg, the Deputy Prime Minister, had been that the least-well-off had to come first. He is concerned that benefit changes and the introduction of the universal credit will increase disincentives to work for some low-paid families.
Plans for tax breaks have been effectively killed off but there is still no agreement on funding, the source said. The system is complicated and ministers are trying get the money to the parents who need it most, but it is not proving easy, especially as there is not a lot of new money.
British families pay some of the highest childcare costs in the world, with on average 27 per cent of income going on nurseries, childminder or nannies. This compares with an EU average of 13 per cent. Despite the expense, quality is variable. Ofsted rates one in four providers as in need of improvement.
The Government spends almost £5 billion a year in subsidies but ministers are struggling to understand what it is all going on.
Stephen Burke, director of the Good Care Guide, opposed the plans for tax breaks, saying that they would only benefit better-off families. But he said that something had to be done to reduce costs or the economy would suffer. Its make-or-break time for British families. The cost of childcare is crippling many families and ensures that work doesnt pay for many parents, he said. As other European countries show, the answer is for government to substantially increase subsidies for childcare.
(Is it legal to quote all that, doesn't it violate their copyright?)
There is a companion article in the Times, which talks about deregulating the childcare industry which would probably reduce costs for all, too. Difficulty is that it puts more responsibility into hands of parents to judge if a childcare situation is safe. I'm not sure if Nanny-state Britain can handle that.
Thing is, I'm not sure deregulating numbers will bring prices down.
Deregulating numbers will certainly not bring the cost of childcare down. Prices will stay exactly as they are. The only difference will be that childminders will be able to look after more children and earn a living wage for the hard work they do 10 hours a day (yes, 10 hours a day Xenia! 8-6pm) - and children will be sat in front of CBeebies more often.
When my friend looks after 3 children, which she regularly does - I think it's one 4yo and two under 3 - she barely gets time to carry out the Ofsted requirements as it is. She's constantly changing nappies, potty training, feeding, putting them down to sleep. She never stops all day, in quiet moments she catches up with her Ofsted-required observations.
She also has to take her own young children to and from school, as most CMs do. Outings are a mammoth task with a triple buggy or having to strap them all into the car when the weather is poor.
The simple fact is, most CMs would balk at looking after more than 3 children anyway.
The only people who will benefit from deregulation will be the owners of private nurseries, who will be able to pack more children in and turn more of a profit. Nursery workers will continue to be low paid, usually young and have only basic training and qualifications.
There's simply no such thing as cheap childcare unless your own family is prepared to do it for expenses only.
Does this mean vouchers will stay for now?
as have another 2years childcare for 2 under 5s to fund.
I'm afraid the coalition are "squabbling" about it.
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