To think new childcare costs screw women?

[idontknow54789]

Before getting pregnant with DC2 day rates at nurseries around here were £70-80 a day. Now DC2 is here they’ve gone up to £120 a day! My DH earns over £100k so we don’t get free childcare. It’s now looking like it’s not worth me going back to work - it’s going to cost us for me to work. I know we’re fortunate that he has a decent salary (this is London though so doesn’t go far). All nurseries are saying it’s the lack of funding for the ‘free’ hours that are forcing them to put up costs so much in a year. So the lower earner (I know not always women but often are for many many reasons) gets screwed and it disincentives them to work. I feel so deflated over this. I’ve got my hard hat on here as I know a lot will say how privileged we are he earns that but this is more of a rant about my personal situation and career and others in my position.

@Kitte321 Your comment is strange because I never mentioned any of those things. Maybe you got me mixed up with someone else? If OP’s husband earns a huge salary then she can go part time or full time and he can pay the nursery fees or they pay proportionately. Even with the funded hours, my household has significantly less money than OP’s household who pay the full fees.

Agree! It’s also silly how two people could earn 99K each and get the financial support yet if one doesn’t work and the other earns over 100K you get nothing.

You suggested reducing the cap even further so less people would receive funded hours.
That would result in more women being forced out of the workplace and the other consequences listed.

I agree it's really frustrating, but as others have said, it's a relatively short term cost, so I would prioritise impact on your career of taking a few years off.
It is frustrating though, that those who pay in the most get cut off by the government in various different ways. Such as the universal child benefit cutting off at 50k, that's a salary earnt by nurses and other health professionals with only a few years experience. If we carry on this way net contributors will continue to move abroad and we will all be stuffed.

I agree it’s obscene OP - the value of the free hours plus tax free childcare is now about £8-10k in the South East per child.

£100k after tax and student loan is <£5k a month after tax.

Two nursery places can cost you ~£4k a month with no funding.

A mortgage on a very ordinary house can be another £2-3k a month.

£100k doesn’t make sense as the cut off for childcare hours IMO - it’s just chosen as it’s a round number - and has been frozen for years.

People earning >£100k pay almost 50% of income tax, yet are being excluded from the benefits they fund for society. Childcare isn’t a luxury, they will be using it to allow them to work.

I also agree it’s ludicrous given the impact on the lower earner in a relationship.

Two £30k earners plus support for a nursery place, and child benefit will have a similar monthly income than one £100k earner with a student loan.

£30k = £2k net x 2 plus ~ £1k childcare support = £5k a month.

£100k after tax and student loan = £5k a month. But they also have to pay full whack nursery fees, which might be £2k a month.

So… the household on a far lower household income ends up better off due to tax + benefits in this scenario.

It doesn't work like that in the real world. If working puts the whole family in dept, then it's an unaffordable thing to do. It doesn't matter which parent is earning the money.

Also there are plenty of cases where their "DP" only "allows" them to go back to work if they cover the entire childcare cost themselves, which of course is impossible if they cannot get childcare cost help because their DP is on a high wage.

1. If you are just over the threshold then there is a way around it as your DH can put money is his pension.
2. Either the state shares the cost of your childcare or your DH shares it, and given his earnings and the fact it is his DC that seems fair.
3. You are looking at it short term but it's a long term investment in having children and a career.
4. You are assuming that you must find a way to take care of the DC rather than looking at it as a shared expense and shared problem. Your DH could look at part time too.

How far over £100k is your DH, @idontknow54789? We are also in London and had DD2 last year. DH upped his pension contributions to take him under £100k as his bonus last year would have lost us more in childcare funding than the bonus itself was worth. Then I dropped to 3days per week, so we have our eldest in preschool FT with 30hrs funding and our youngest in 3days per week with the 15hrs funding. That brought our bill down to around £1900 per month, which felt more manageable. DD2 will go 4days per week from Sept when the new hrs kick in and DD1 starts school. We've treated it as one year of pain but worth it for me to keep my job for long term.

In our friendship group, others have dealt with it by both parents dropping to 4 days per week but taking separate days off and so only needing 3days childcare.

Also agree with a pp that it isn't necessarily just the new funding that has caused this, but also NMW increase, NI increase, business rates etc all feels like a bit of a perfect storm.

I get that the cut off has to be somewhere, but the £100k mark for loss of tax free childcare, funded hours and the entire personal allowance means many of us end up funding our pensions rather than paying ridiculous tax rates.

Our salaries haven’t kept up with house prices, childcare costs and inflation so the middle are feeling the pinch more than they used to. Money that used to be spent in restaurants, shops and small businesses is being cut back. Fiscal drag is fully in play to plug the hole in the government finances as we all have less disposable income.

because as a family they are worse off with her working than not. How demoralising is it to bring nothing home

How far over 100k is he? Can he put the excess into his pension for a few years to bring it down?

Are you including all the extras in your calculation, not just the base salary? What about company pension contributions, NI contract for state pension as you won't be claiming child benefit, anything else a company might provide like subsidised canteen, health care or gym membership?

They only screw women whose partners think childcare costs are not a joint expense. Choose to work if you want irrespective of what it costs now (think long term earnings/pension). He doesn't get to dictate that you do free childcare to facilitate him working. If he was on his own he'd be paying, using your wages only to pay is just ridiculous.

I get what you’re saying but just to clarify my own understanding, I don’t think the cost of childcare vs the OP’s wage here is putting the family in debt, it’s just more than her net take home pay for a couple of years (3 at most I assume). If you added hers and her partner’s pay and then deducted childcare they’d still be getting a surplus income after childcare costs (which is the way it should be done IMO).

It is very expensive for a full time day nursery and for a daily nanny (we have used both in our family over the years - children and grandchildren now) It was pretty bad when we had our first - we spent 50% of our net salaries on the full time daily nanny in the 1980s because of having to pay her tax, NI and employer NI and all out of already taxed income. I (woman) have always been the higher earner. It is certainly never a woman's cost only so your half is what you could be looking at and if you work full time that may preserve a career for the next 30 years so worth treading water for. We live in outer London which is cheaper than inner but still expensive for childcare.

I have said many times how difficult things are (and were in the past) for higher earners. My father had upper rate tax at over 63% in the 1970s and it never seems to get any better. The 10% of people who earn over £70k (before tax) have paid more and more of the tax burden in the last few years as other people's NI went right down under the Tories. Those on 70k plus now have the highest tax burden in 70 years and lose the personal tax allowance, don't get child benefit, only get the 15 free hours from age 3 that criminal illegals get etc etc.

The state has a huge disincentive on people to earn less and therefore our productivity is low. The state reaps what it sows and ultimately this will damage the poor.

And does your job also pay well? Obviously it's your decision if you want to work also but I'm shocked at £2600 a month for childcare! Although appreciate your south east.

Increase his pension contributions to bring his taxable income to below £100k, and/or donate to charity/take a week or two of unpaid leave.

It's so short sighted by the government to penalise higher earner like this. If you were working, the tax and ni you paid would very likely cover the cost to them of funded hours. Or the reduced tax if your husband drops his income under 100k to qualify. We need to encourage higher earners as they prop up our public services

This.
Plus, it is not just your cost. It is your DH's cost too!

I disagree actually - as i think with very high childcare costs, there is always going to be some adaptation to working patterns to try and reduce the cost.

And - because of the impact on household income, this is inevitably the lower earner.

I don’t think OP’s issue is that her DH is ‘dictating’ she ‘do free childcare to facilitate him working’ - it’s that because they as a household are excluded from tax free childcare and free hours, the net benefit to working is far lower.

It’s all very noble to say ‘oh yes but both incomes are equal, even if the second income doesn’t cover the cost of childcare’ - but the reality is most people aren’t going to go through the ordeal of having two full time workers and young kids to be… financially worse off than if they didn’t.

The reason OP finds herself in this situation isn’t because of her DH, it’s because the tax system is heavily incentivising it through removal of very large childcare subsidies.

Every family I know in this situation is doing some mad tax planning or hours reduction to keep below the threshold. They wouldn’t be doing so if the threshold wasn’t there / applied as a cliff edge.

Once you take business expenses and tax off that £36 an hour, it’s not extravagant

In a typical 40h working week, 46 week year, that's over £66k income. And you can have 3 under 5s AND more school aged children on top. Even allowing for making 15% pension contributions, its not bad money - its quite a bit more than a degree educated teacher takes home.

The childminders I know don't have high business expenses. They feed the children tiny portions of cheap crap, and expect parents to send nappies/pay for all extras. The insurances & admin etc are not very costly and most re-use toys that their own children had a rarely replace them.

Everyone pays tax on their wage, we don't quote employed people's salaries on a post tax basis so its irrelevant.

For £11/h for one child I would expect really good food for one!!

I earn £56k (4 days) which isn’t bad but doesn’t go far in the south east. After childcare and commuting costs I earn about £600 a month. I still think it’s worth working because of the long term impact on my career. Pretty depressing though 😂

I hate this argument. The reality is straightforward. If having two people working brings in LESS to the family than one high earner because of childcare cost, commuting, wrap around care etc are most people going to deal with the sacrifice and exhaustion that comes with the very real juggle faced by working parents? Nope.👎

The issue (as pointed out up thread) as the tax system which disincentives higher earners and is killing off productivity.