Tories campaigning to remove the childcare maximum income threshold

[FlakyPastries]

Kemi Badenoch has announced that the Tories want to remove the upper income threshold on childcare.

This means all working families will be able to claim it, including those earning over £100k.

Do you agree with this policy?

My baby’s nursery charges £30,000 and the free hours and tax free childcare is worth around £15,000 - so this is quite a significant benefit for those currently unable to claim.

Actually it was a libdem policy enforced as part of the coalition agreement.

Nail on the head. Especially the bit about valuing higher earners as assets rather than cash cows.

At present, the cliff edge and also the erosion of the personal allowance beyond £100k drives behaviour. This includes large pension contributions, reducing hours and refusing promotions.

Money contributed to pensions could be spent in the economy, buying cakes, new bathrooms, cars, restaurants etc. What is more, we'd have our most capable strata of the workforce working more and aiming higher. I realise this is hard to precisely quantify, but I am confident that the increased tax take would outstrip the cost of care being saved at present.

It stops people reducing their working hours and not taking promotions etc so as to stay under the £100k cliff edge. That will translate into higher productivity as people working more means increased economic activity, increased production etc., and in the case of doctors and dentists, shorter waiting lists and getting patients back into work sooner rather than them languishing on waiting lists on SSP!

There is an excellent FT article on this but it is paywalled. Beyond just giving childcare to these people it also gives the message that high earners won’t be punished in a Tory UK.

I think this is actually a sensible decision. I don't mind high taxes but I think the state should be offering as many "benefits" (i.e. education, childcare, healthcare, social care) as possible universally to everyone who needs them.

So essentially we say "if you earn more you pay more tax, but you still get the same things as the state offers to everyone else". It's much less likely to cause resentment in those high tax payers that way.

And I would also get rid of the personal allowance taper. If politicians think people earning over £100k should pay more tax, fine. But don't do it with weird mechanisms that discourage people from taking pay rises and encourage them to chuck extra cash into pensions.

See also any of the other crazy pay thresholds where the tax treatments encourage goal incongruous behaviours by taxpayers (earning more money, paying more tax, contributing more to the economy).

Sure, but we're talking about a relatively small group. What's the evidence that the cost of the policy would be offset by the extra spending?

Electorally, it seems an odd choice to prioritise a bung for a small number of high earners when there is no real evidence that I can see that this will make a substantial difference at a macro level.

I do actually think that the cliff edge is unfair and a tapered approach might be fairer. Having said that, I don't really object to free childcare being a universal benefit.

I just think it's a really odd policy for the Tories to choose to focus on.

I think it makes sense for a working mother to focus on a policy that helps working mothers.

This is pretty much exactly where I’m at with it. I don’t think it’s a terrible idea. I’m sceptical about the idea that they can realistically find £700 million of cuts for this without doing harm - and wary about what going after the Arts Council and the environmental agency for these cuts says about their direction of travel on the creative industries and the green economy (both areas with genuine potential for growth).

But other than that, it just sort of seems… small fry I guess, in terms of a big flag ship policy.

One way or another they've got to address the taxation cliff edge, it's absurd. Loss of free childcare is just one of the consequences. They could set the limit at, say,£200k, past the point where people divert money to pensions or drop a day at work.

But its an ever increasing group of people due to it being frozen for so many years. Left indefinitely, it will catch those who currently earn £50,000 or so. Thats the nature of long-term fiscal drag.

And it might not be politically correct to say so, but as an economy, they are the small group that are the most productive, driving innovation and wealth creation.

And, what is more, those who will crow about tax breaks for the rich etc are unlikely to vote conservative anyway, who cares if they hate it?

I can’t imagine many people will hate it, will they? It just feels a bit like a policy for good times, and somewhat at odds with the economic reality.

I do think the cliff edges in the tax system need to be addressed, but this wouldn’t be the first way I’d address it.

It’s the message it sends. If you’re prepared to work, we’ll help you do so. I hope they will also seek to give everyone back a personal allowance. I like the effort they’re making to cut benefits to people who don’t want to work and take PIP from people with dubious claims to it.

These are all policies that appeal to those who work hard and don’t want to see the taxes they raise squandered. we need to incentivise and reward working more.

I agree. However, the same people that screamed about robbing pensioners when the PM announced the SP will only increase by the higher of RPI or 2.5% instead of RPI, AEI or 2.5% will start the crowing about tax breaks for the rich, and wanting disabled people to die etc.

But it won't help most working mothers. It will only help a tiny percentage of them.

It would cost £700 million a year. We don’t have £700 million a year. We have crumbling schools,social care in dire need of an overhaul, an NHS on its knees….and the Tories want to chuck away £700 million a year on the richest sector of the country for zero reason( other than votes). When are they going to stop putting themselves before the country? Just stop. We’re sick of it.

I agree that it's the message that it sends which matters.

But I disagree with you about the content of that message.

You think the message is that the Tories will reward hard work. I think the message that it sends is that the Tories are only really interested in making the rich richer.

It's an odd group to prioritise during a cost of living crisis in which lots of ordinary people are struggling.

I would argue that you'd be happy for the poor to stay poor, as long as the rich were a little less rich.

If we carry on penalising a relatively modest level of income with tax and childcare cliff edges, we drive behaviours that are detrimental to the whole economy. The current rate is a result of frozen thresholds, fiscal drag, boiling frog, whatever you want to call it. Get past the ingrained left wing lens and see the bigger economic picture.

They’re just not fit to govern.

And as for getting rid of the environment agency, equality rights… WTAF!

Well, you can argue whatever you like, but you are showing quite poor judgment to make unsubstantiated claims about what you think I would or wouldn't be happy with. You have no evidence to back up your claims. You don't know me and you can't speak for me, so please don't try to pretend that you can.

I've already said that I don't agree with the cliff edges. And I'm absolutely interested in the bigger economic picture, but I stand by my earlier comments. I think this was an unwise option for the Tories to focus on.

I don't actually mind if they want to focus on stuff like this. It will just make them seem even more out of touch and unelectable. I'm just surprised that they can't see that.

Be better to increase the personal tax allowance. That would benefit everybody.

@MrsBennetsPoorNervesAreBack It’s not. Kemi recognises that her core voters are in the SE, S and SW and obviously London. That’s where the higher earning families reside and it’s certainly penalizing people by £ thousands a year so they reduce hours to get the benefit. These are the people who also pay the most tax and we need that tax! Essentially they don’t get child allowance and pay for a lot that this country values. We need them to stay and work in their valuable jobs. They also have the highest housing costs and nursery fees.

If others want the jobs - education can help them achieve highly too! We need to look after business and higher earners or they just go.

And that’s why we can’t have good policies/ nice things. Because people just look at the effect of their wallet rather than what will drive economic growth in the short, medium and long term and they whine if they’re not ‘winners’.

Unbelievably expensive, helps out the low paid workers who are already paying far less tax than in any other EU countries.