The £100k childcare cliff edge - how is anyone meant to make this work?

[Saladleaf]

I completely understand that on paper, a six-figure household income sounds like a lot. I’m not trying to be ignorant of the fact that many people are struggling far more. But for anyone actually living it, especially in the South East, the reality feels very different once you factor in childcare costs.

We’re looking at full-time nursery fees of around £2,500 a month per child, and I honestly don’t know how families are supposed to make it work once you hit the £100k cliff edge and lose access to the 30 free hours. It’s completely unsustainable.

I know some people say you can get around it by putting more into your pension so your income technically falls below the threshold, but that just isn’t realistic for everyone. With the cost of living, mortgage, and general expenses, we simply can’t afford to take home hundreds less each month. We already don’t have holidays, don’t buy new clothes, and don’t even have a car. There isn’t any more to cut back.

It’s not even about wanting handouts, it’s that full-priced childcare in this country is so eye-wateringly expensive that it makes working impossible for many women. The system actually discourages the lower earner, usually the mother, from staying in work.

A friend of mine is a good example. Her husband earns over the threshold, and she’s just spent years retraining into a new career that she’s passionate about, but is now entry level. We worked out that if they have a baby, it would literally cost them money they can't afford for her to keep working once childcare, rising mortgage payments and bills are factored in. She’d have to give it all up. It’s so demoralising.

And the whole system makes no sense. Two people earning £99k each can claim free hours, but one person earning £100k can’t. Someone on £50k with one child gets support, but a couple on £100k with two children get nothing, even though their childcare costs are double and they are taxed more. It’s not unreasonable to have worked hard, built a decent career and want two children, but the government seems to penalise you for it.

Other countries manage to offer affordable childcare to everyone because they see it as essential. Here it just feels like you’re being punished for trying to do well. For those of us in the South East, it’s even harder. Living costs are sky high, childcare is extortionate, and it’s not realistic to just move somewhere cheaper when your jobs and lives are here.

It feels like you’re being backed into a corner. I find it so demoralising that the system seems designed to push mothers out of their careers, especially when you’ve worked so hard to build one in the first place. AIBU in feeling like this?

Exactly. We haven't even had the luxury of buying a house, we are trapped in eye watering rent; I wonder how many of these small-minded people who have tiny mortgages and telling me I'm living beyond my means had help towards a deposit. We are trying to move on in life, and have built a decent salary in an attempt to do so, but it's not enough.

So the lower middle class want more free childcare but not more taxes. How does this work mathematically?

1. The childcare is not free but inefficiently subsidised. 2. By definition if people fall into the £100k "cliff edge" they're paying a great deal of tax already.

Yes. There are many things I appreciate about my life and I'm happy with my lot.

But I find it hard to be lectured to by people who think I should just cut back on avocados because I must simply be profligate to waste all that money. My costs are similar to yours. We've got a 2nd on the way. We've been doing the sums on nannies, not because we're posh snobs, but because the cost for 2 kids in nursery is over £5k when you aren't funded! Five thousand pounds!

People just don't have any idea of the actual costs of things. I'm Mrs Moneybags and should be swimming in it - well, maybe I would be if I were paying all the subsidised versions of my biggest expenses...

No one is criticising the choice to be a SAHM. They are saying women shouldn't be forced into it because their husband earns say 110k and they earn 30k. Therefore making them as a household much worse off then a couple both on 70k.

All those 30k jobs are often teachers/ nurses/ social workers and other public sector stuff which is important as well. And the South East and London need them too!

What is a "passive income"?

"Passive income" is from assets like shares or a buy to let.

What type of jobs are you all doing to earn £100,000? I don’t know anyone on that amount or anywhere near it

Financial services, law, corporate.

London.

Corporate law
Management consulting
Investment banking
Private equity, hedge funds & similar
Software engineer/PM in big tech
Senior management in corporates

^ not an exhaustive list but these are the jobs of me and many of my friends in London

Also GP at some levels
Consultant at a hospital

The list is getting bigger and bigger because of inflation!

Sounds clever stuff! Way above me

But the husband could pop £10k a year in his pension and then they would be much better off than a couple of £70k

I didn't realise so many of my fellow high earners were so self pitying and hard of thinking

That's what other countries do? What people think is ridiculous is paying for other people's childcare hours while not having access themselves. (And I say this with an annual income nowhere near 100k or even half that)

What we we need is "State" nurseries like we have "State" schools. Part of the issue is that all commercial businesses need to make a profit or they won't exist.

(Also... why is it only childcare people think should be means tested? We don't say people can't use the NHS or Fire Service if they earn more than a set amount for example)

I have a few friends in HR roles too (or talent acquisition as they like to call it!!) who are on 6 figure salaries.

Perhaps you would prefer the old system we had, zero support! 15 hours from age 3 is universal

Well done for wholly failing to understand the issue…!

The £100k income limit was introduced when eligible 3&4 year olds first became entitled to 30 hours in September 2017.

Shhh. Don't give them ideas...

Totally correct! The reason is, that the government assume that the lower earner ie the woman can just be a housewife like the 60s. And that £100k is enough for a family of 3 or more to live on in London…

But (at the risk of repeating myself and others) why would anyone think a system disincentivising work is a good idea? Sure, you can salary sacrifice, drop to 4 days (I have done both) but what about this makes any financial sense for tax revenues?

What's discentivising about chucking a bit of extra cash in your pension? Anyone sensible would be doing that anyway

This, plus first time buyer stamp duty holiday buying a literal shed in London. People in this bracket are literally shafted every which way they turn. We can’t afford to put the extra into pension when we’re paying extortionate rent and being robbed blind for childcare plus trying to save for a deposit. How is it possible??

I don’t think it’s a huge incentive for most people to only only be able to reap the rewards of your income in 25+ years - and that this is dictated to you by the government.

In London / the South East, housing is extremely expensive. People want the money now, to provide X quality of life to raise their children - afford a house, that kind of thing.

Also - from a policy standpoint this makes no sense anyway, as they both lose the tax on that income AND have to pay out for the childcare… so lose out financially.

On the last thread about this, someone said doctors can’t put more into their pensions because they don’t work like that so that’s why so many go part time. It’s absolutely fucked if you can’t work full time as a dr and afford childcare and I can’t believe the snidey comments about cutting your cloth. Would you pay 20%+ of your salary out on something the vast majority are getting for free? And feel grateful for the privilege? No you would not.