To be angry about the new "free" nursery hours

[pimlicopubber]

We're not eligible for the new "free" hours starting at 9 months, because my husband is lucky enough to be earning over 100k. However, I earn far from that, so 2 sets of nursery fees are more than my salary. We live in London with 2 small children.

We are comfortable, but don't splash out, we shop at Aldi and don't own a car. Our salaries basically evaporate after paying rent and nursery fees, yet the government is treating us like we are the Kardashians when it comes to the marginal tax rate.

As a result of the "free" hours that don't actually cover nursery costs, our nursery increased fees for everyone, because they need to cross-subsidize the free hours. Also, the ratio of caregivers dropped from 1:4 to 1:5 and we can't move to a slightly cheaper nursery further away, because they have incredibly long waiting lists due to the huge demand. I'm thinking of quitting work, even though it will be damaging to my career in the long term.

AIBU to be disappointed and angry that a policy that was supposed to motivate people to work has an opposite effect for our family?

Actually it might not work like that.

I posted this point somewhere else earlier in an argument for universal free child care:

When starting out, those higher income people have a cash flow issue rather than a wealth issue. They have huge mortgages and child care bills. They aren't asset rich. They just have huge debts and an ability to pay off those debts later.

It would be better all round to tax to fund childcare for everyone, because this reduces that cash flow problem, helps to keep women in the workplace (and therefore paying tax rather than being economically inactive and more economically better off in the long term) and makes them less vulnerable to financial abuse.

The cost of universal child care is still going to fall on the higher tax rate payers earning over £100,000. They aren't getting 'free child care' at all. They'd pay for in via other means rather than directly to the nursey - crucially over a longer period which would make it easier when in the earlier stages of a mortgage when they need the cash. They then continue to pay it as their mortgage drops. Crucially couples will continue to pay tax on both incomes rather than one having to drop a salary for a while because its cheaper to stay home than send your child to nursery.

They are likely to ultimately end up paying more in tax than they would on childcare directly but its more benefical because of when they pay the cost being more benefical to them.

Keep in mind that currently the cost of childcare is one of the reasons people are having children later. Having children later carries extra health risks - and costs to the NHS - than having them a few years earlier. So again you have another potential saving to be had in this area.

There are lots of logical reasons why shifting to a system where everyone gets universal child care, is financially a good idea and benefits everyone. It values child care and those who provide it and doesn't put women having to make this choice of paying to work or staying at home.

Or the wife drops out of employment. This is the most important one.

Let you explain? You don't seem to be aware of how the free hours scheme works.

People with household incomes of 199k can use it, as long as that 199k is distributed in such a way that neither are over 100k. It is for people on that income just as much as it's for people who couldn't afford childcare without it, as evidenced by the fact that both would get it. Meanwhile, a single parent on 101k with no other income coming into the household wouldn't.

It's a ridiculously designed system, and it's telling how many people disagreeing with OP clearly don't understand it.

Anyone earning £100k is paying a shitload of tax and getting nothing in return. They are literally subsidising lower/no earners who get lots of top ups from the benefits system if they have kids. You should be thanking op for paying so much tax to benefit society, not criticising her.

You do realise that is before tax and lower salaries are heavily topped up by the massive amounts of tax paid by high earners.

As I said on the other thread it's having some particularly bad side effects.

Doctors are refusing to work more hours because it's not worth their while to do so, because they can be caught out by the £100k mark. My BIL carefully keeps an eye on it so he doesn't go over and lose his child care and end up worse off.

Given that we have huge waiting lists, and massive staffing shortages in the NHS this is really unhelpful for us as a society.

I know my BIL probably would do a few more hours if he wasn't being caught out like this. That's also money lost to add to taxation.

Furthermore, you get a certain amount you can put into your pension pot before you start to get taxed on it. Financial advisers have told some of my friends that this is where they should retire because financially it doesn't make much sense to carry on working. They've retired in their early 50s. This group haven't been earning anywhere near 100k but had good pension schemes. The stupid taxation system is encouraging them to stop some 15 years early rather than continuing to add to tax revenue. Going back to doctors, this is a particularly problematic issue because the NHS are losing a huge number of highly skilled workers who they can't replace and that's another reason waiting lists are building up. The current government has noticed a rise in economic inactivity particularly in the 50 to 65 year old group.

The fact that you could have a household income of £198k and still get free childcare but a household which gets £101 for one worker might find itself asking the much lower paid partner to stay at home to cover child care just highlights the absurdity of the system.

When you are on £30k I can understand why you feel pissed off at people on huge amounts more complaining about tax. But you ultimately want those people to work as much as possible and for it to be worth their while because it's about skills in the workplace benefiting society as a whole, increasing national productivity and ultimately paying more in tax which aids the services we all want.

Universal child care can enable more people to work and pay tax for more years. It arguably it more than pays for itself in the long run because keeping women in the workplace for a few extra years gains tax revenue during that period and allows they to progress their career more easily and to raise their income. This would reduce the tax burden on lower earners and may help to stop the state pension age from continuing to rise! Yet we have this mentality of wanting to 'punish' high earners out of jealousy rather than because it makes economic and social sense for the country.

It is counterintuitive but it is something that the incoming government really needs to take a look at because at the moment it's financially illiterate.

The trouble is policies which 'punish the rich' are extremely popular in certain sections of the population - the VAT on private schools is an example - so it's unlikely that Labour will look at this and think about it in a logical way that benefits us all.

Yep!

This thread is a great example. OP asked if she was BU to be pissed off about a policy that clearly deters some people from working. Yet we've had a parade of woe is me nonsense from people who in some cases don't even understand the system they're defending. It's like they're trying to sound thick.

But I don't think anything will change until more people understand two things. One, that people make choices like this, about whether it's worth working more, at many income levels. And two, that people making these choices will sometimes be the reason why their NHS consultant won't do any more clinics, why their local cafe can't get staff, why that vacancy at work remains stubbornly unfilled.

Ridiculous and unfair isn't it.

We don't qualify for any free hours at all. Lots of families earn over 100k with their combined salaries, why are families with one high earner penalised yet others handed free hours on a plate?

Free hours should be available to everyone or nobody!

It's arguably a sexist policy that leaves women financially dependent (and therefore vulnerable) on their partner's and stunts their own earning ability because it affects women more than men. This has implications for abusive relationships.

Yet the double professional couple on a medium income will be paying less tax as well as getting free childcare as a household despite earning considerably more.

It makes no sense on any level.

It's indisputably sexist. Because it treats single parents badly, and they're primarily women.

Yeah but. It’s not fair that someone earns 100k and I don’t

You know what. I know plenty of people who claim benefits who have many of the things you outlined.

what’s the point of OP and her husband working long hours and paying a shit load in taxes if she isn’t getting nice things

According to mumsnet, merely having a mortgage and a private pension is reward enough for being in top ~2% of earners.

People on lower wages work hard too. Some harder than those in higher wages with more physically demanding jobs or jobs in the care sector.

Yeah but. It’s not fair that someone earns 100k and I don’t

Pretty ironic considering the whole post is it’s not fair lower earners have some of their childcare subsidised and paid I don’t.
In reality those on over 100k (after pension and salary sacrifices so often a good bit over the 101k that’s thrown around) do receive subsidised childcare, they just receive less due to their income. The 15 hrs from 3 is universal.

No, you don’t understand you must not earn very much!! People on 100k work so hard and after they have paid for their expensive mortgage (choice) and fancy car they have almost nothing left. They are working for literally no reward apparently, their salary doesn’t count.

It is a poorly designed threshold as you lose the free hours, the tax free child care etc at that point and the marginal tax rate is very high. However, you will still get access to the 15 ‘free hours’ at 3 which will reduce things a bit.

As others have said you can reduce via pension contributions so chances are you’re not really just over the threshold. it makes financial sense for anyone over £100k to up their pension contributions to get under the threshold. He should do this and then see the pension pot expand which will do you in good stead in later life.

As a family we were caught by this and for a few years it sucks but you have to realise you are in a fortunate position and should be covering the nursery costs for a short period of time. The extension of ‘free’ hours was always an illusion. You will have 1-2 years where it feels tight especially if double running but once those years are over you will be in a very fortunate position. It will get better once oldest gets the 15 hours and 3 and then is in school.

Hmm. A few people seem to be missing the point that if childcare was universal for all, then higher tax payers would probably end up paying MORE in tax.

But still. You know. Its all about punishing the higher earners.

🙄

😂

But lower income people (scum) don’t want mortgages or fancy cars or their kids to do lots of clubs so it’s okay for them to have nothing.

@RedToothBrush But still. You know. Its all about punishing the higher earners.

High earners paying for more of their childcare bill because they can afford it and it does not leave them in poverty is not a punishment.
Having almost nothing left after childcare on minimum wage is not remotely comparable to someone choosing to purchase a house that’s at the top end of affordability and seemingly have children with 12 month gaps to always have 2 full nursery bills despite higher earners still accessing 15hrs from 3years.

I actually disagree with free childcare anyway. The money should go to the NHS. When we had babies we knew we'd either pay for their care or one of us would stay home for a while and have less luxuries, not expect the tax payer to pay for it. Maybe you're not much over 100k, but that's a hell of alot of money when so many people cannot feed and clothe their children, living off substantially less.

I live in Central London and there are many families!

why can’t they complain about the cost? Just because someone lives in Zone 1 doesn’t make them rich, there is a plethora of social housing in zone one, there are also people that bought in areas that may not have been the place to be 15 years ago (e.g. Hackney).

It seems very discriminatory to just assume all those that live in zone 1 are cash rich…..a bit like taking the position it’s ok to be racist vis a vis a black/ Asian Tory MP just because they are a Tory.

Yes a 110 k is a lot of money - but it’s nonsensical that all the ‘free’ childcare is lost unless the money is put into a pension…..

Are you not worried about all the people working in the NHS who need childcare subsidy to allow them to keep coming in? The HCAs, cleaners, porters and caterers don't get paid much, and childcare isn't cheap.

The conversation is those earning over 100k, not those in social housing. If they were in social housing they would have access to the funded hours.
So yeah, you don’t get to choose to living in Z1 while moaning about childcare prices and how high your mortgage is on a high salary. It’s entirely choice at that point