AIBU to hope the £100k cliff edge for funded nursery hours is removed?

[horchatatresleches]

News is that the education secretary is looking at nursery funding but it’s unclear if it’s to reduce or increase the support available at either the upper or lower thresholds. AIBU to hope that the harsh cliff edge which stops all nursery funding at £100k is removed or least replaced with something tapered so that people aren’t losing money for being marginally above the threshold?

You do know that someone earning £100k per year takes home £68,500 after tax and NI deductions. They contribute almost a third of their salary to support others so, yes, they do deserve something back.

So you think you should immediately end up being eg £15,000 net worse off for earning £1 extra?

What kind of behaviours from employees might this incentivise, do you think?

YANBU. The cliff edge is bonkers. I don't normally go along with the whole 'net contributor' type argument, but I think that all working families should be able to benefit from free childcare- just like they can benefit from the NHS or schools. Otherwise you're just taxing aspiration and ambition.

The £100k cliff edge is why so many doctors work part-time. Due to the complications of the NHS pension, it's much harder for doctors to just stick their income above £100k in a SIPP, so lots of GPs and consultants choose to work part-time, as overall they'd be worse off if they worked full-time and lost the childcare subsidy.

But that funding is not for early education, otherwise it would be available especially for more disadvantaged children, and it is not available for non working parents (some is but not the 30 hours from 9 months). It is for childcare so parents can get back into the workforce. And I do feel that if you are earning £100,000 you can pay for childcare.

How the hell can someone on a £100k salary need government help? What am I reading. If you need financial help with childcare fees something isn’t right, you are living well beyond your means. I swear some people are on another fucking planet.

We paid £1200 a month for nursery back when there was no funding (except for those receiving other benefits). Do you know how we did it? We spaced our children so we didn’t have a second until the first was in school. We lived within our means and we organised our working patterns so that we could maximise our working time and minimise costs.

Do you know what I’d love to see? Proper support for people who can’t work due to illness. I have advanced metastatic cancer. Do you know how much support I can claim each month? £380! £380 does not cover my mortgage or monthly food bills for a family of 4. Yet Henry and Matilda on £120,000 a year are whinging about having to pay for nursery costs for the baby they chose to have, but didn’t adequately budget for.

We earn over £100k as a household when I’m working (which I’m not at the moment), it’s a very comfortable life. We don’t qualify for any childcare help (no tax free childcare) and it isn’t a problem. But we have always lived within our means. I would much rather see childcare better funded for those who qualify, with childcare providers paid a sustainable hourly rate, than Henry and Matilda who are already well off get even more breaks and have an extra holiday this year.

I don’t think many young families with nursery aged children who are between £100-125k PAYE are prancing around in diamond shoes. Most will have significant mortgages, significant nursery bills and are also affected by the COL crisis. Income isn’t the same as wealth. We don’t come from money, and while we acknowledge that we’re fortunate to earn what we do, we’re far from rich. We shop at Lidl, and most of my child’s clothes and toys are from Vinted/Marketplace/charity shops. The only shoes I’ve bought this year for myself is a pair of Crocs - diamond free.

I don’t want freebies so I can buy a diamond necklace to match my shoes, I think the funded hours should be available because

1. in the current system people can be £50k gross worse off by working. I don’t think there’s a single person in the country who wants to lose money for working more

2. it’s a benefit available for working people, and higher earners are working people. As a group the £100k+ are taxed heavily and I don’t mind that, but as with other high tax nations like in Scandinavian countries, the benefits are universal

3. I’m not convinced that the cliff edge saves money. Means testing anything is a cost, plus the tax loss of people salary sacrificing into pensions or reducing hours or avoiding promotions to avoid the trap reduces productivity in a section of the population the government should want to be most productive. It’s unknown how many children this affects (someone on Reddit did a FOI request and got nothing back) but presumably it’s not near a majority

If they reduce salary sacrifice, then people will simply reduce their hours instead. My husband is considering a reducing to four days or a nine day fortnight when his current busy period ends. If there’s not the financial benefit to working then he’d rather spend an extra day with our child unpaid than working for nothing. Doctors can’t salary sacrifice, and as a result there’s not a single GP in my practise with children who works full time.

I think they should raise the threshold, but I also think it should be done on household income.

You haven’t read the thread have you. As pointed out, in London one nursery place can be 50% of the take home salary of somebody on 100k. If you have two nursery-age children you lose 100% of your take home pay. The maths don’t work.

A) After tax, NI, auto-enrolment and student loan £100k is £59,203 a year (£4,934 per month).

One nursery place locally to me is now £2,300 - £2,600 a month (£27,600 - £31,200 a year).

This means even at £100k the cost of putting in one child in nursery is going to be ~50% of your net pay.

B) The removal of the childcare can be worth ~£15k net per child. So you need to earn £35k OVER £100k to break even with earning £99k. This is a bad incentive - as it encourages people to work less, or salary sacrifice (ie pay less tax). With two in nursery I take home £0 between £100-155k now.

C) What do we define as services for all, and services you are excluded from based on income? Why are schools free but childcare not? Should this group be paying for their own healthcare! Etc etc. Why just childcare?

Yanbu. Cliff edges are bad. I don't want to miss out on either the services or tax take from someone who reduces their hours to stay below 100k.

Who can afford diamond shoes while living and working in London on £100k 😆

If I lived and worked in Sunderland then maybe. Have you any idea how much more nurseries are and housing is in London? Get a grip!

A full time nursery space now is more like £2k per month. Nursery costs have risen dramatically. Part of it is to do with the funded hours not being enough, so the full fees paid also help subside the funded children. One child in nursery is about half of a £100k salary these days. We are living within our means, and budgeted for our baby. But in the time since getting pregnant my husband was promoted, and had an unexpected bonus in February which tipped us over the limit. I’m not sure how one can plan for an unscheduled bonus which will make you thousands of pounds worse off than the value of that bonus. So we put it in pensions where it can’t be taxed at the higher rate.

And just because previously people coped with poorer provision doesn’t mean it can’t improve. We coped with six months of SMP/ zero pay after my OMP ran out and just two weeks of paternity leave. We budgeted for it and were fine with it, but that doesn’t mean that I wouldn’t support higher maternity, and longer and better paternity pay just because we were fine. It’s not a race to the bottom.

There’s also no need for snidey ‘Henry and Matilda’ comments. It’s not about an extra holiday or being careless and thoughtless.

OP you miss the important principle that in giving all working people free childcare you are showing taxpayers that they pay in and get out. That their (high) taxes and invested in public services and they get back. That they are PART of society, not just treated as cash cows to be milked. That everyone is working together for a common goal.

It’s an important reason behind European principles of universal benefits and one the UK government totally overlooks.

And don’t ever go back to full time after their children leave nursery either. How many full time GPs are there? This is one of the reasons,

This.
As a committed socialist, I am totally in favour of high taxation and wealth redistribution. But I am also totally in favour of universal services (as opposed to means testing for services).

Everyone should pay in according to their income and wealth, and everyone should benefit from what society provides. That should include free childcare for up to 40 hours a week from 12 months old, for those parents who want it (with no compulsion on the main carer to work or job seek until the child is about say 4 years old).

Then the re-distribution is via cash transfers i.e. means-tested cash benefits.

A government that leaves such a cliff edge in place is just incompetent.

Makes sense to have a taper off? To not hurt incentives. Why should high earners be funding for things everyone else but them have?

I do get the need for a revised system.

But honestly, £2,300-2,600 for one nursery place sounds excessive. There must be cheaper childcare settings than that. That’s above average price

Yes, we do actually need to make the cash cows amongst the population feel like they get the benefit of their labours. As someone who cares about public services and will never experience this particular cliff edge, I can still see that it's in my interests to do something about it.

Agreed but a lot of higher earners make the point that you could have someone on £100k with a partner on £20k who don't get funding and then two people earning £95k each who get funded childcare. There needs to be a household income cap.

This. The comprehensive services should be open to all.

Not just those who haven’t / have barely contributed to them.

Why does there need to be a cap at all? Why not have this as a universal benefit for all working families. That means that people will be taxed on more of their salaries because they won’t need to move money into pensions or reduce hours to avoid the cliff edge, and also as other posters have said, have high earners benefit from public services as opposed to just paying into them.

Tapered but not removed. 100k is a tremendous salary and you shouldn’t need state support at that income level. However I do believe it should be on household income. As it disproportionately affects single parents. Two 50k salaries take home more than one 100k salary.