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?

What about folk earning just over £50k?

No, people expect to use the same services as everyone else because they pay for their own costs AND subsidise it for others. If you want these services to continue to exist this part of the social contract is essential.

See my first post on the thread: a single earner with children and £100k salary is very significantly poorer than a couple both earning average UK salaries, let alone £50k.

They are way better off than a lone parent on anything under £150k if they have young children.

You think there are many people who receive more than £8k per month in benefits?

The only people I can think of who would be getting close to that would be a large family all or majority of whom have significant disabilities, and are renting in London. Even then I don’t think they’d get that much.

£100k after tax, NI, autoenrolment and student loan is less than £5k a month take home.

Of maybe they are a lone parent…

I think Bridget will be wanting kids from zero income families in childcare care to get school ready. So scrap the 16 hour working mandate potentially. It is of course ridiculous, but that group on average are the least school ready and never catch up.

It’s £5,713 even with NO student loan and NO pension contributions. As I said, only £253 more than a couple with two children who both earn the average UK salary, and receive the funded hours and “tax free” childcare which can save them £20k per year in total, so £1,667 per month, which makes the couple £1,414 better off than the lone parent with two children earning £100k.

I think you’re really missing the point @Toadstoollover.

They’re expecting the same services. Not more.

That 8k is before tax, NI and student loan repayments. Factor those in and you’re looking at around 5k monthly take home.

There are absolutely people who receive around 4k a month from the state to pay for their expenses, including housing costs.

To me the level at which is is removed is a totally different conversation from removing the cliff edge.

I would rather not get involved in the level conversation but the cliff edge is just crazy.

How can you have a tax system where someone could receive a £10k pay rise and quite conceivably be over £25k a year worse off (2 nursery aged kids).

It needs to be a taper so that a pay rise still means more money in your pocket.

Yep. People who don’t do anything all day will soon not even have to look after their own kids in that time.

Agree. Thresholds are problematic but the single parent penalty more so.

I'm on £50k. If DH and I split up, I'd be eligible for tax free childcare, universal credit of £238 a month, child benefit and single person council tax discount. I'd have a monthly income very close to DHs currently monthly income as a £100k earner. And that's without child maintenance payments. How is that fair?

Do you also realise that people who earn just under 100k are actively avoiding a pay rise or bonus because it won’t be of financial benefit to them because they will lose the funded hours? This is also means there is lost potential to pay more tax if people don’t want to earn more.

That was us when DH got a pay rise. We couldn't believe it. We had initially celebrated his pay rise but once we realised the monthly impact we were really shocked.

I got hit badly by this cliff edge. My DS is now in Reception however over the 3 previous years I got awarded a combined total of £70,000 in bonuses and had to refuse them all as I would have been worse off taking them.

I don’t care what peoples relative levels of income are, how can it possibly be right that your employer can award you £70k and the tax system means you have to refuse it?

There are other households with higher take home pay than I have who would have been able to take the bonuses.

This was our position with an unexpected bonus in February. It became a ‘how do we deal with this we aren’t significantly worse off?’. Most of the money went untaxed in pensions so we could claim the hours, whereas without the cliff edge we’d have taken it and it would have at least been taxed as well as us having the benefit.

Out of interest, were you not allowed to put the money into a pension?

(I agree that the rules are stupid).

I had already maxed out pension contributions.

This

Ah ok

Exactly. What ‘more’ services are the £100k earners expecting here? They want access to the SAME public services that their taxes pay to provide for everyone else. That doesn’t seem in any way unfair to any thinking person.

And I’m happy with that. If it shows that it it’s in the best interests of all children to have access to nursery care as a means of early years education then that’s an investment in the future generation. Early years is so critical and if a group of children can be supported through high quality education for children that benefits everyone. I don’t want to take that away, but I also think the nursery hours should be available to all working parents as well.

I think one of the key points when you look at these numbers is who is most likely to be on £100k per year and why it might be a significant issue.

One of those groups is doctors and it's a known problem that doctors are taking early retirement or refusing to take on additional hours because of the cliff edges with pension contributions and childcare.

Certainly my BIL was in this camp, so he wouldn't work extra shifts even though he was willing to in principle simply because it effectively resulted in him working not just for no gain but for a loss in income.

Given we are desperate to cut down waiting lists in hospitals it actually would make a great deal of financial sense to remove these caps if it meant key hospital staff in these roles would then take on extra shifts. Especially since the treasury only loses out a percentage of this because every extra pound earnt is still taxed anyway. So you would have extra income from tax plus less costs from conditions being treated earlier so being less chronic and therefore expensive versus the cost of the extra childcare. In reality the cost of the extra for childcare being paid by government is a lot less of a negative (if at all) than you might think.

But it really depends on who falls into this key group across the board. There aren't too many professions that pay this though.