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.

That's an interesting approach, do you feel that way about every state benefit?

No idea why you directed your comment at me then because I was saying that single people (including those with no children) are shafted by the tax system and this needs to change. And that those higher earners with no children should absolutely have access to all of the state services that they contribute so much towards, covering their own costs of use many times over. Hence the current means-testing is a mistake and it would be even more idiotic to extend this dysfunctional system to other state services e.g. state pensions, which would impact the people you are referring to. I've certainly not said they should be happy just because they have roads and rubbish collection and educatiom etc.

The post of mine that you commented on was mocking the absurd, goady poster who always appears on threads like this and makes a fool of herself, and her assertion that she has lived her entire life without using any public services except refuse and roads. Either that or she failed to grasp that looking at one period of her life in isolation is completely irrelevant despite multiple posters having pointed this out and that she one day may be grateful that all of those nasty higher earners have funded her pension and the NHS.

How do you work out that you need to earn £6k to cover £3k childcare? How do people earning £1k or less after childcare do it then? Are you saying you pay £3k in tax

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

£100k salary with no pension contributions made equals net pay after tax of £5,588 per month. £2,746 per month paid in tax.

Full time nursery places cost £2,000+ in many parts of the country. So with even one child in childcare 50% of their pay goes on tax and childcare. If you have two children in childcare your "rich" person earning £100k is left with £1,500 per month to pay mortgage, commuting, bills, food and everything else. And that was a conservative estimate for nursery: rates where I live (not London btw) are £2,300 pcm per child. In London it's often more.

Of course we are only talking about the nursery years here and not their entire life earnings.
on 100k you pay tax and national insurance of 35k. You could then need to pay an additional 6k in student in student loan so take home pay of 59k.
2 kids in full time nursery could easily cost about 45k.
so of that 100k salary you would be left with 14k. I wouldn’t consider 14% a sizable chunk or 14k enough to cover a large mortgage, holidays abroad as well bills, food, travel costs to work.

That's an interesting approach, do you feel that way about every state benefit?

Multiple posts here have explained why it should be, if you have bothered to read the thread. If you wish to dispute the very convincing evidence base from multiple independent economic and social research papers and the evidence of published data on outcomes both economic and social over decades from our comparator countries whoch show the effectiveness of their systems that are universal, then it is perfectly reasonable to request that you provide your evidence refuting this data. I think after the Brexit fiasco most of us are not prepared to tolerate the "everyone's opinion is of equal value even if it's based on prejudice and completely contradicts the facts" mantra.

I think not providing universal affordable (or even free!) childcare is very shortsighted of the government and shows how little focus there is on investment in this country.

You can't treat an economy like a household budget (which a lot of people on this thread don't seem to get) - when you invest money into something like childcare, it opens up opportunities for parents to work harder, earn more, and provide more in taxes whilst decreasing the likelihood of either parent having to rely on benefits in the future (as neither would have to drop back in their career in order to cater for childcare).

Unfortunately, the majority of the voting base probably can't grasp the above concept so it's not a vote-winner, so government is unlikely to propose it.

I have read the thread.
None of the comments have justified why someone on 100k+ needs what is essentially a state benefit.

This just shows what a huge gap in understanding about how the "system" using that term in the loosest sense " works".

People do not pay tax at 20% or 40%.
People pay 0%, 20%, 80 or 90% tax, 40% tax, 60-200% tax and 45% tax.

For anyone earning between £50K and £120K with children there are effectively 4 different tax bands 2 of them over 50%.

Would you also call education and Healthcare a benefit? If you're going to argue that high earners don't need access to one thing, what else do you think they shouldn't access?

Education and Healthcare are services, not state benefits. I'm surprised you even had to ask this.
Still not convinced that anyone earning 100k+ needs access to state benefits.

People can 'grasp' your opinion.

There needs to be more investment in childcare services, both in terms of providing a good and reliable service to every user, and in ensuring those who work in the area are better paid for the essential role they carry out.

It's not just about incentives for higher paid service users.

Well now you're just being daft.

Why is childcare a benefit not a service ?
Did you read what I wrote about marginal tax rates ?
There is a problem with perception that £100K is a huge amount of money. It is a good wage but people on this level of income still need to budget and definitely need watertight childcare.

OK, stating facts is being daft. Rightio.

Which facts ?

Free/subsidised access to childcare is the benefit. Childcare itself is a service.

100k+ is a huge amount of money, no matter how much those earning it say it isn't.

The facts I listed when you informef me I was being daft.

Is this honestly what you call intelligent debate?

Your opinion isn't a fact.
Where do you draw the line? Should they have to construct their own private road network? How about airspace, can we use that? Are they allowed to ring the police?

I haven't said you were being daft.
£100K is about £4,000 pcm after tax and pension ( perhaps £3.5k after student loan). 2 lots of childcare could easily be most of that.

It's not an opinion that Health and Education are considered public services. Private education is obviously slightly different as those are businesses with charity status.
Childcare provision is a bit similar in that it is essentially a service, although lots of it is actually provided by businesses, and clearly current access is not free (although may be subsidised). I do think there needs to be more investment into childcare/early years/wraparound care in general, so that everyone has access to affordable and good childcare, and that staff are paid well for what is a very important job. I don't think that providing access to more free/subsidised child care services is a solution without investing more in the ground roots of the service to start with.

Sorry, small screen, it must have been another poster (edit, yes, it was).

I have read the thread.
None of the comments have justified why someone on 100k+ needs what is essentially a state benefit.

It is not a "benefit" unless you consider education and healthcare to be "benefits". The reason for taxes is to provide public services for all citizens that are a) a public good that benefits citizens and the country, and b) are more practical and/ or efficient to provide on a collective basis, either for reasons of practicality/ necessity, reduced costs or risk spreading.

Childcare/ early years education fulfils these criteria. Decades of data from other countries and a significant body of independent research clearly demonstrates that the provisions of heavily subsidised or free universal childcare improves health and educational outcomes for children, reduces child poverty, increases overall tax revenue and more than pays for itself in the long-term, reduces the gender paygap, reduces welfare dependency, reduces lifelong wealth inequality between men and women etc.

Economic data also shows that the lack of provision for higher earners (whom the UK is unusually dependent on for a disproportionate percentage of its tax revenue and productivity) alongside the cliff edges in the tax system that need to be removed, reduces productivity and growth and decreases overall tax revenue therefore reducing the money available for services/ benefits for the poorest. Discouraging your most productivie workers, many in skills shortage areas, from working full time is clearly a bad idea. There is a significant body of independent economic research on this as well as the HMRC data which shows the pattern quite clearly hence the Chancellor commissioning an independent investigation into the impact on productivity, the final report of which states very clearly that this is a key driver of low UK productivity and tax revenue.

Then there is the fact that means-testing public goods like childcare undermines public support for the provision at all because those who are funding it for everyone don't even get to use it. As we have seen the effect of this over time is that fiscal drag is inevitably applied to the threshold and therefore fewer and fewer people are eligible. This is how you effectively abolish a service or benefit by stealth. It has been demonstrated repeatedly every time something has been means tested, see also child benefit. The same will happen to state pensions if the electorate are ever stupid enough to support means-testing them out of spite and envy, thinking the threshold will never apply to them. Means-testing is the first step in abolishing something entirely and normalising the idea that it isn't an essential public good that the state should provide to all citizens.

All of this has been explained in the thread so for you to claim that none of the comments justify why it should be universal is rather bizarre.

If you do have some economic studies or data that somehow refutes the huge evidence base for the above then please share it. Otherwise your opinion on the matter is clearly wilfully ignoring the facts because your resentment of the idea that higher earners should also be allowed to benefit from the services they fund even when them doing so benefits everyone else as well and preventing them doing so costs the country more than it saves, and is therefore not of any value in terms of assessing what the policy should be. You are entitled to hold illogical opinions that contradict all factual evidence, of course, but if you cannot support them with any logic or evidence then there's not much point in pretending you can contribute anything worthwhile to a discussion with others on the topic.

Exactly! Even if higher earners don’t NEED free childcare, if giving them it is proven to increase tax take, then we give them it, no? I mean it prevents the satisfaction many posters take in being spiteful, so that’s a bummer, but it makes the country wealthier, so it’s good!

In addition to all of the points raised by @ThePeaAndThePrincess there is also a massive regional divide in cost of living and productivity between London/SE and the rest of the country. So the higher earners in London are doubly screwed because others think they are rich. The mass exodus out of London of families with children speaks for itself.