Should tax-free childcare and ‘free hours’ be universal?

[Nursery772]

Having attempted to apply for the new 15 free hours for my nearly two year old, I discovered you are not eligible if you earn over £100k.

My four year old also receives only 15 of the 30 free hours for the same reason.

I am not sure if the additional 15 hours from 9 months / 2 years will be income contingent.

Between this and tax-free childcare, I will lose about £12,000 of post tax income in 2024/5 tax year.

This seems very onerous!

Should tax-free childcare and ‘free hours’ not be universal? It is an expense to allow me to work, and I’m paying quite a bit of tax.

Also being applied as a cliff edge is brutal, seems to create an artificial ‘cap’ on the amount parents of preschoolers can earn.

@Perhapsanorhertimewouldbebetter

For people in general.

On average, the responses to this thread have agreed that the way the current policy is applied is not fair. The cliff edge cause significant earnings loss and actively incentivises people to work less / put money into Pensions / avoid bonuses and promotions.

At the same time, there does seem to be a significant number of people saying it being entirely universal doesn’t seem right either.

So the compromise is to remove the benefit from high earners, just do it in such a way that it isn’t incentivising people to cut hours etc.

This could remove the effective 100% tax rate families are facing on earnings between £100-130k, while also expecting higher earners to contribute a higher sum towards childcare costs.

I feel like it should be universal. The high earners pay a lot more in tax and should also get some benefits from it and some money back so it is good for them to get support during the few years that their costs are significantly higher. Childcare is essential to enable them to work and maintain paying their taxes. We pay taxes to support society in general which included everyone (including themselves ) and not just part of the population.

I think your last sentence there is key!

I've read every comment in this post, and am yet to be convinced that subsidised/free child care for those earning 100k+ is remotely justified.

Could you try to justify why it shouldn't be universal then? Properly exploring all the economic consequences for society in particular please.

Yes, inclusivity means just that. Not just some people.

As stated by PP, it is early years education, so all children should be entitled to have access to it

@fitzwilliamdarcy what's your point? Bizarre post. I've outlined many of the things that everyone benefits from, the vast majority of the cost of which is funded by only 10% of the population.

These are public goods from which everyone benefits. They maintain public support while they remain universal. When you start mean-testing them they gradually become eroded, not least because the thresholds are gradually reduced in real-terms so that fewer and fewer people receive them. I'm not sure what part of this you don't understand and why you're implying that there's some kind of inconsistency in stating that those who pay the huge majority of the costs for everyone to have these services should also have access to the service they have paid for themselves. Why would this make sense for healthcare, education, but not early years education and childcare (the provision of which benefits everyone. Why do you think it is free/ much more heavily subsidised in all of our comparator countries? Our of the goodness of their hearts?).

Nobody said they were "hard done by". People have pointed out indefensible, illogical and damaging policies that harm the economy and lower UK tax revenues and therefore the money available to pay for services for everyone^^ as well as unfairly penalising individuals around each threshold. Strange that you want to support illogical policies that make everyone, including you, poorer because you can't bear the idea of someone on a higher salary also getting to use the services they fund. Should the same logic be applied to schools, healthcare, state pensions, etc?

As I said earlier in the thread the fastest way to undermine a public service and effectively abolish it over time is to means-test it then continually raise the threshold by less than inflation. If you fancy going down that road and people who earn low incomes support that then it won't end well for them given they are the most reliant on the public services they are undermining. Very short-sighted when it's quite obvious what will happen if such policies are enacted as has already been demonstrated through years of fiscal drag on the thresholds for the things where such counterproductive means-testing has been applied already. Don't say you weren't warned.

They are working probably very hard on what is probably a stressful job with long hours (and before anyone starts I am not saying that lower earners don’t work hard) to have the majority of their pay going on tax and childcare. Therefore, they are largely working for the financial benefit of others and not themselves. That is hardly going to incentivise them.
this childcare is what enables them to work and pay taxes. If childcare is 3k a month then they need to earn almost 6k a month to even cover it.
all those saying that childcare shouldn’t be subsidized probably think 6k a month is a huge amount so imagine earning that and not actually seeing any of it. It’s clearly not easy to earn that amount otherwise everyone would be.

I agree as although many will say 100k you’re so rich, in reality no you’re not most of the time. I’m on 65k and I can’t even afford a flat!! It’s all relative to where you live, if you’re the only income in your household etc. I do find schemes whereby people who don’t work and take up nursery spots get a place and working parents don’t or have to pay a lot more wrong. Not saying those looking for work shouldn’t get a bit of help to go to interviews etc but why should those who are paying 40% tax not get any help. To me it’s wrong

Which specific year? Some people are healthy childfree adults their entire working lives.

Part of the reason they are probably healthy is because they had immunisations as a child that were developed and provided by tax payer funds. They are probably able to breathe semi fresh air due to laws and regulations introduced and monitored by tax payer funds.
they live on streets that are not overrun with rubbish and sewage filled with disease as they are kept clean using tax payer funds.
They probably are able to work because they were educated at schools which were probably paid for by tax payer funds.

Is it usual to spawn as a healthy employed adult, and drop dead at your retirement party? Don't give Musk et al any ideas.

Obviously. None of that is remotely relevant to a discussion about net contributors and recipients.

How is it not relevant?

The point I am trying to make is that there are a lot of things that you receive from tax money rather than just schooling for your child and treatment on the nhs during your working years.

@ThePeaAndThePrincess I was pointing out what is a common hypocrisy on MN. When someone raises higher earner parents getting their share of a child-related benefit, it’s all “you need them onside, they need to feel the benefit of the social good and not just that they’re paying out for everything and getting nothing back.”

When someone points out that healthy higher earner non-parents spend their lives paying out and getting nothing back, that same person will turn around and tell them they’ve got the benefit of roads and a justice system and they should feel grateful.

It’s a total double standard. Either all high earners need a bit of extra buy in or we should be happy with roads and laws.

Oh, and I’ve been a net contributor for years, so there no politics of envy here.

Having children is not just for the benefit of the individual. We need new generations to come in for society to be able to continue.
yes, it is a choice and people should be responsible for a lot of the costs associated with their children but childcare is not a normal cost, it is a cost to enable them to work.

@Nursery772 Agreed about the single earner, my DH does well (likely to hit 100k in next tax year if he doesn't increase pension), but his job is well-paid partly because it has ZERO flexibility, so can't help with much kid logistics etc. I wouldn't be able to work FT in an office/commute without an aupair/nanny help, therefore I earn minimal money as self-employed/school hours with 1 partly at home still. With 2 parents on 50k, they'd be a lot better off than us, to the tune of probably 10k/year, easily once we lose the TFC/free hours.

🙈😂

Why assume it's only the poorly educated who earn less than 100k....it's nice to hear how you value the services provided by nurses, junior doctors, teachers etc who give a shit about the welfare of the population so do vocational jobs rather than go for financial rewards.

Absolutely @fitzwilliamdarcy.

but his job is well-paid partly because it has ZERO flexibility, so can't help with much kid logistics etc.

Right. What about all those people who work in jobs with zero flexibility and can’t help with ‘kid logistics’ but aren’t well-paid?

Where did I say only the poorly educated earn less than 100k? Of course lots of people who earn less have also studied and worked hard. Most people who earn over 100k probably previously learnt less than 100k for many years aswell.
But that doesn’t mean that those earning over 100k didn’t study and work hard.

What, so you think high earners without kids should get free childcare as well? Do they get a cash substitute or do they have to physically the nursery themselves?

The MAJORITY of their pay going on tax and childcare??.

I don't think so - tax is paid by everyone at 20% or 40%. Childcare is not for years and years - 2-3 years max.

They are NOT being altruistic and working for the benefit of others and not themselves. How many of them are doing important and worthwhile jobs making life better for others?

If someone is on 4 times the average UK salary they are keeping a sizeable chunk for their nice living standard, expensive house in the SE, holidays abroad and the rest.