Mega survey of UK parents shows unaffordability of childcare

[RowanMumsnet]

Hello

Over the past month or so we've been assailing you all with links to a huge survey of parents in the UK asking about their experiences of using childcare. Now the results are in - 20,000 responses from parents on MN as well as Pregnant then Screwed, Gingerbread, the TUC, the Fawcett Society, the Women's Budget Group, the Fatherhood Institute, Black Mums Upfront, Mother Pukka and a few others - and they show:

96% of British parents say the government isn’t supporting them enough with childcare

97% said that UK childcare is too expensive (83% said that it is ‘much’ too expensive)

One third (33%) of parents using childcare say their childcare payments are bigger than their rent or mortgage

40% (and 53% of parents under 30) say childcare costs mean they don’t spend as much time together as a family as they’d like, because of the need to work longer hours or do shift work

28% (and 40% of single parents) say they’ve had to use credit cards or credit arrangements to pay for essential items, as a direct result of childcare costs, and 12% (34% of those with a household income of less than £20,000) say they’ve had to cut back on essential items, including food and housing

82% of mothers (and 56% of fathers) say ‘I think I would have attained more seniority in my work, or earned more, if I had not had childcare considerations’

16% of mothers, and 42% of fathers, say childcare responsibilities have not affected their seniority at work

Unsurprisingly, parents are willing to consider radical alternatives to the current mess:

94% of all parents believe that subsidised childcare should start from the end of paid maternity leave, and 90% think there should be taxpayer-funded subsidised childcare from when a child is 9 months old

90% of all parents support at least three months of ‘use-it-or-lose-it’ parental leave for fathers, paid at at least minimum wage level

84% support a duty on large employers to provide subsidised childcare

83% support universal free childcare (covering the full working day, for all pre-school children and all children with ongoing Health and Social Care needs), funded by the taxpayer

82% support tax-funded subsidised childcare covering the full working day, for all pre-school children, with subsidy levels dependent on household income

59% support a Universal Basic Income for all UK adults.

You can find out more here and read the Guardian's coverage today here.

Let us know what you think!

Thanks
MNHQ

@Iamthewombat

Of course. The tax and voting posts were in response to a PP suggesting that the U.K. should be able to make better childcare provision work because other countries manage it.

The reason we don’t is obvious: British people tend to vote for low taxes.

We don't have low taxes. That's the issue. With the new NI changes, a nurse or other mid-paid worker on £30k is technically on 20% tax but would give up nearly 50% of any pay rise in income tax, NI, and student loan repayment. On top of that, she'll be paying VAT on purchases, council tax and more.

That's not low tax.

Personally I support a relatively high tax system, but the other side of that is that working and tax-paying people need to be able to benefit too.

We don't have low taxes. That's the issue.
With the new NI changes, a nurse or other mid-paid worker on £30k is technically on 20% tax but would give up nearly 50% of any pay rise in income tax, NI, and student loan repayment. On top of that, she'll be paying VAT on purchases, council tax and more

Have you checked that assumption, compared to other countries?

I am not an NHS consultant, no, but it would be deluded to suggest that work life balance issues (including childcare) don't affect them.

Who said that NHS consultants are not affected by work life balance problems? Nobody. You claimed that it was difficult for this group to pay for childcare, which is demonstrably not true because the NHS consultant pay scale runs from £82k to £110k.

I’m surprised that you have chosen this particular hill to die on. You’d have more success arguing for better childcare provision if you chose a group that truly struggle with the cost.

However, the vitriol heaped on anyone who posits that the system doesn't work for any (women), high paid or low paid, suggests it will be extremely hard to find a solution because it's those high payers who would need to put in the additional tax to make a change.

You didn’t ‘posit that the system doesn’t work for any women’. You focused on a group of highly paid people - NHS consultants - and argued that hospitals, who surely have more than enough to do already, should arrange childcare and au pair visas for this well-paid group, who by virtue of their high earnings have better access to childcare than, say, a nurse working in the same hospital.

You also threw in a reference to the pension cap, which if these people are affected by means that they have final salary pension pots worth more than £1m. Why did you think that that would support your argument, or attract sympathy for that group?

Your premise, and your argument, were challenged. That’s not ‘vitriol’. It’s rather childish to suggest that somebody who disagrees with you and is able to take apart your argument using facts is ‘vitriolic’.

We don't have low taxes. That's the issue.

Oh, we do. As @Iggly notes, have you compared our standard income tax rates to European countries on a like for like basis, bringing in the cost of health insurance? You might be surprised.

With the new NI changes, a nurse or other mid-paid worker on £30k is technically on 20% tax but would give up nearly 50% of any pay rise in income tax, NI, and student loan repayment. On top of that, she'll be paying VAT on purchases, council tax and more.

That's not low tax.

Compared to what? Other countries have VAT. Other countries pay the equivalent of council tax. How do you think stuff gets done locally? How do you think that stuff is paid for at all?

As for the student loan repayment, do you think that you shouldn’t have to pay it back? You haven’t shown your workings but if you earn above the threshold then yes, a percentage of your pay goes towards repaying your student loan. I don’t know what loan scheme you are on, but if your pay increase is subject to 20% income tax and 12% NI (13.25% from next April), and you are on the loan scheme with 9% repayments, you will be subject to deductions of 41%, 42.25% from next April. Describing that as “almost 50%” is rather fanciful.

How much do you think income tax would have to go up by, if everybody gets to go to university for free? Would you consider that fair on low paid people who weren’t able to go to university?

Finally, you may not realise this but until you are paying higher rate tax, you are not a net contributor.

Perhaps those who wish to be parents should save in advance for childcare, as one would for any large expenditure.

@KosherDill

Perhaps those who wish to be parents should save in advance for childcare, as one would for any large expenditure.

🤨

Or perhaps we want a strong economy where all adults, who are capable, can contribute?

Part of that equation involves childcare - for children who are the future of the country, like it or not.

As for the student loan repayment, do you think that you shouldn’t have to pay it back? You haven’t shown your workings but if you earn above the threshold then yes, a percentage of your pay goes towards repaying your student loan. I don’t know what loan scheme you are on, but if your pay increase is subject to 20% income tax and 12% NI (13.25% from next April), and you are on the loan scheme with 9% repayments, you will be subject to deductions of 41%, 42.25% from next April. Describing that as “almost 50%” is rather fanciful.

You're leaving out employer NI, which ultimately is a tax borne primarily by employees given the effect on take home salaries. The workings are here www.ft.com/content/bbaf099a-0b5b-48ad-9ca5-fee26844c1df

I also don't think it's right to add in health insurance as a cost in other countries, but exclude student loans. In many European countries you'd be paying little to nothing for your education, and also not health insurance if you're on a low income. Personally I am a higher rate tax payer and therefore a 'net contributor' as you'd say, but nevertheless don't think it's helpful or fair to encourage so many young people to do university courses that will be unlikely to provide a major salary boost, nor add meaningfully to national education levels, then require them to pay it back based on a 'graduate advantage' calculated when a degree had more value. It's especially unfair when children of wealthier parents will have less to pay, or pay nothing at all, when their parents pay it up front.

Corporation tax levels are low, and we have an issue with a large number of people either not in work, or in work but on such low wages that they need benefits subsidies (which are ultimately just subsidies to the corporations who should be paying their workers properly). On an individual level for those earning above UC level, it's a lot to pay for health system that is good in a crisis but terrible at the basic primary care that most workers actually need, a school system with massive classes, unemployment benefits that (unlike many European countries) drop you immediately to a subsistence level if you lose your job and expensive public transport. I'd be happy to pay more for a true social contract, or would (regretfully) accept if the popular vote truly was for lower tax and a crap public system. Right now feels like worst of both.

Do you get that it’s not you paying employer’s NI? Your earlier post says,

…a nurse or other mid-paid worker on £30k is technically on 20% tax but would give up nearly 50% of any pay rise in income tax, NI, and student loan repayment

You aren’t ‘giving up’ the employer’s NI. Your employer is. It makes zero difference to your take home pay.

The rest of your post goes off on several tangents including the value of certain degree courses, the fact that some people are richer than others, a complaint that graduates are expected to repay loans when their earnings reach a certain level irrespective of degree subject, the fact that you don’t like what tax is currently spent on and that old favourite, corporation tax (“tax the rich companies! There’s no way that they would, er, relocate to a lower tax environment, or that higher CT rates would, you know, decrease the overall tax take, is there?”). I was however pleased not to read ‘make Amazon pay tax!’, which people regularly chime in with before being gently informed that Amazon do, in fact, pay tax in the U.K.

None of which is directly relevant to the specific point, which is that if we want European style childcare provision, we have to pay extra tax to get it.

@KosherDill

Perhaps those who wish to be parents should save in advance for childcare, as one would for any large expenditure.

I did. However I also think that people who have less money than I do, or whose financial circumstances change for the worse, should have the option of having children and accessing quality childcare staffed by well-paid carers, if that is what they need, because that’s the sort of society I want to live in. And I don’t mind subsidising that for them if that is what is required.

@Iamthewombat some people do pay employers NI.

Agency workers pay both employers and employees NI from their rate. This is because loads of agencies are crap and aren't doing what they are suppose to do which is calculate the workers rate after employers NI has been deducted.

@KosherDill

Perhaps those who wish to be parents should save in advance for childcare, as one would for any large expenditure.

Even if you can save some money towards it - I did and so did my DP - you can't save for the fact that the price will increase while your child is still using the provision.

I'm also happy (and have always been happy) to pay income tax to help other people's children have quality childcare and social services.

I have a selfish reason for this as my family has suffered in the UK from children and young people who haven't been brought up properly. There as when I worked abroad I knew there was quality state provided childcare and social service provision, which was proven to limit the number of children growing up as delinquents.

[quote RedMarauder]@Iamthewombat some people do pay employers NI.

Agency workers pay both employers and employees NI from their rate. This is because loads of agencies are crap and aren't doing what they are suppose to do which is calculate the workers rate after employers NI has been deducted.[/quote]
Yes, I know, but that only applies to a small number of people who work on an interim basis, are not employed in the formal sense, are caught by IR35 and who work through an intermediary who provides a payroll service. I very much doubt that that was what the PP meant, and a reasonable proportion of those people will be self employed and working on good day rates in any case. Loads of contractors in my profession, finance, do this. Both the employer’s and employee’s NI comes out of the day rate along with PAYE and the apprenticeship levy.

For hourly paid agency staff, deducting employer’s NI from the hourly rate is sharp practice by the agency, if it employs the individual, and can be challenged. It certainly doesn’t mean that the default position is “employee bears the employer’s NI”.

@Iamthewombat

Do you get that it’s not you paying employer’s NI? Your earlier post says,

…a nurse or other mid-paid worker on £30k is technically on 20% tax but would give up nearly 50% of any pay rise in income tax, NI, and student loan repayment

You aren’t ‘giving up’ the employer’s NI. Your employer is. It makes zero difference to your take home pay.

The rest of your post goes off on several tangents including the value of certain degree courses, the fact that some people are richer than others, a complaint that graduates are expected to repay loans when their earnings reach a certain level irrespective of degree subject, the fact that you don’t like what tax is currently spent on and that old favourite, corporation tax (“tax the rich companies! There’s no way that they would, er, relocate to a lower tax environment, or that higher CT rates would, you know, decrease the overall tax take, is there?”). I was however pleased not to read ‘make Amazon pay tax!’, which people regularly chime in with before being gently informed that Amazon do, in fact, pay tax in the U.K.

None of which is directly relevant to the specific point, which is that if we want European style childcare provision, we have to pay extra tax to get it.

You might well be smarter than I am, but apparently also pretty confident that you're smarter than the writers and editors that work on a front page article for the FT? No need to be so condescending when some things are a matter of opinion.

1. Employer NI has a huge impact on salari, because as an employer you're concerned about total cost to hire. And with employee NI going up by 1.25% percentage points, cost of existing employees is therefore rising - so the average employee is therefore seeing their own take home reduction via the increase in employee NI AND their employer is less likely to give them a pay rise, which is particularly bad when inflation is now running at 3%. So likely an effective further paycut.

1. Student loans matter, because they are effectively a graduate tax (albeit one that the wealthy can pay their way to reducing). Graduate taxes can be absolutely fair in a situation where there is a clear advantage to graduates. However now they are not only a tax, but one that for many will outweigh any graduate benefit. It's addditionally relevant given you mentioned healthcare costs borne by those in other countries - but often by people bearing no education costs.

1. Nice of you to 'gently inform' people on Amazon. After all, they claim that they paid £0.4bn in 'direct taxes' last year on revenue of £4.85bn. Sounds good, for a company that officially makes around net 6.9% profit margin! Except that this includes their national insurance contribution, business rates, stamp duty and absolutely anything else they can throw in. There is absolutely a reason that almost all of their UK sales are routed through Luxembourg, home of the 15% corporate tax rate and far more options for creative offshoring, as well as negotiating a tax bill up front (which, to be fair, is absolutely an option for corporations in the UK, just from a slightly higher base. Not for people though).

Tax receipts overall are quite high on a historical level - but not for the very largest and most influential (and profitable) companies.

1. The tax spend is important because that's the entire point of the childcare discussion. There's always an element of consent and fairness in taxation, with none of it you end up with a revolution. Compared with counterparts in many other developed countries, low to mid income working people and families in the UK pay a middling tax rate, but don't get the support available for their counterparts. In many countries, there is for example childcare support to ensure you stay in work with young children (or in France's case, the right to hold a job open for many years, which is a mixed blessing, but still), or similarly, if you lose your job you have benefits pegged at some % of salary (to a cap) for a brief period of time. Taxes may be (slightly) higher but the contract is clear. In other countries you get far less, but pay less tax, the state is only there to stop you hitting rock bottom. Also clear. Here, working people pay a lot of tax, while also getting rock bottom services. That's the issue.

Nice try, but you have misread the article in the FT. Who pays employer’s NI is not a matter of opinion. It is a matter of fact.

You do not ‘give up’ employer’s NI from your salary and your effective income tax (comprising actual income tax, NI and your student loan repayment) rate as an individual is not 50%..

I bet that if you asked the writers of the article you linked to the same question (ie does an individual pay employer’s NI and should employer’s NI be included when calculating the marginal tax rate for an individual?) the answer would be an emphatic no.

In response to your other points - not going down without a fight, are you?:

1. Are you seriously suggesting that anyone will have their salary cut by 1.25% next April when the NI rate goes up? The example you gave was of somebody in post already and earning £30k.

It might affect the cost of future hires but the market is driven by the value and scarcity of skills. So employers might try to offer a bit less for new hires, but if the skills are in demand, eg HGV drivers, they will be forced to offer more.

1. Who said that student loan repayments weren’t a form of tax? I repeat my questions from earlier today: do you think that you shouldn’t pay for university, and do you think it would be fair to ask lower paid people who can’t go to university to pay for you through increased taxes?

1. So you agree that Amazon pays tax in the U.K. then? I can see that you have been frantically googling for the breakdown, but you clearly agree that anybody claiming that Amazon don’t pay tax in the U.K. is talking out of their backside.

As for Luxembourg’s role in facilitating tax avoidance: how would you make them stop offering favourable terms to tax avoiders? Ask them nicely? Invade? How about the Caymans or the BVI?

1. You are still convinced that people in the U.K. “pay a lot of tax”. Well, it’s not enough to provide European style benefits so it can’t objectively be “a lot”, can it?

Unless you are one of the people who thinks that if MPs worked for £20k a year, hitch hiked to work, lived on KFC and lived in bus shelters, there would be enough money to give the NHS a 25% pay rise, build 20 new hospitals and fund free childcare for all?

Nice try, but you have misread the article in the FT. Who pays employer’s NI is not a matter of opinion. It is a matter of fact

Why are you being so rude? Of course who pays the tax is a matter of fact. That higher payroll taxes depresses wages is a matter of fact also. The extent to which this happens and the tradeoffs around tax are absolutely a matter of opinion, given conflicting and unclear research and different views of how, where and why we should pay tax.

Absolutely I searched to check my facts on Amazon, because I had a broad idea but wasn't sure of numbers, and wanted to check my understanding before I'd disagree with someone. Why be disdainful - would you rather someone didn't check their facts?

There has been plenty done over the years to make tax havens increasingly difficult to manage - even the UK ones - due to international cooperation and increased transparency. The IMF thinks improvement is achievable, so again, I'll be fact-led on that one.

It's interesting that you'd frame your options as 'agree with me that the reason we don't pay enough tax for European-style childcare benefits' or 'be a stupid person who thinks that if MPs lived in bus shelters then we could afford it'. There are plenty of alternatives. Between our taxes and our very high housing prices and high childcare costs, I think the the burden on lower to middle income families especially is too high, and contributing to women's low earnings, children in poverty, and in the longer term, lower tax take than if we subsidised it. This means that in the longer term it could essentially be self funding, but in the short term it needs funding. Working younger people have a smaller share of wealth than any time in the last century, so taxing income is not the answer, and corporation tax overall is historically quite high (though again the burden is lying on the low to middle earners) - so the clearer option would be to look more at wealth taxes, and in particular at inheritance tax, which has not risen in line with housing prices and which massively perpetuates inequality.

People on here really make me laugh sometimes. Rubbish their ill-conceived argument and they are crying that you are “vitriolic” or “rude”.

I see that you are now contradicting yourself. So you now agree that employees don’t pay employer’s NI, whereas upthread you claimed that they ‘gave it up’ from their salaries, thus supporting your 50% marginal tax rate claim? Good.

would you rather someone didn't check their facts?

I’d prefer it if you weren’t jumping up and down trying to impress with a load of numbers you culled from Google. To what effect? I stated that Amazon, contrary to popular opinion, do pay tax in the U.K., a position that you plainly agree with. So why jump in with a load of numbers which added nothing to the discussion?

I can guess: as a distraction from answering the questions you are keen to swerve, linked to your complaints that you pay too much tax. Here they are again:

1. You resent making repayments for your student loan, which you consider an unfair extra tax. Do you think that your university education and living costs should have been provided free of charge?

1. If so, the money needs to come from somewhere. The ‘somewhere’ will be general taxation. Do you think it is fair that low paid people should pay extra tax to fund a free university education for you?

1. Since the BEPS legislation has already been in place for some time (anyone would think that I worked in finance!), and Luxembourg et al are still offering favourable arrangements to tax avoiders, how would you make those countries stop offering favourable terms? I’ve given you a couple of ideas to get the ball rolling: asking them nicely and invading. What is your plan?

1. Since you continue to maintain that you “pay a lot of tax” but don’t get the services you think you should get in exchange, what public spending would you cut in order to get eg French-style childcare provision? Who’s getting less, so that you can have more? Have you priced what a French-style childcare offering would cost overall.

Note, you can’t say, “make those tax avoiding companies pay tax in the U.K.!” because I assume that you know that you can’t force other countries to abandon low tax incentives.

I’ve been kind and avoided asking how you plan to get a wealth tax to stick. Other countries have considered it and abandoned plans. There’s no way that you’d raise enough through IHT for a large scale childcare subsidy, either. It’s too easy to avoid although I am a supporter of inheritance tax and have little patience with people who complain about it.

@Iamthewombat

I’ve been kind and avoided asking how you plan to get a wealth tax to stick. Other countries have considered it and abandoned plans. There’s no way that you’d raise enough through IHT for a large scale childcare subsidy, either. It’s too easy to avoid although I am a supporter of inheritance tax and have little patience with people who complain about it.

You've not really been kind though, right? Incredibly condescending, absolutely. There are at least 3 countries off the top of my head with wealth taxes (not including France, which is limited and rarely observed).