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New childcare tax break to be announced by the Government today - what do you think?

386 replies

JaneGMumsnet · 07/01/2013 10:06

David Cameron and Nick Clegg are due to unveil new childcare plans in a joint press conference today, with further detail expected to follow next week.

According to reports, families could be entitled to claim up to £2,000 per child every year from their tax bills, to cover the cost of childminders and nurseries as part of a new government scheme to help families.

The new measures will not be means tested, and will replace the current voucher and allowances scheme.

We'd be interested to hear what you think of these proposed changes, particularly in the light of the changes to child benefit which have been implemented today.

Thanks,

MNHQ

OP posts:
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TheDoctrineOfSnatch · 20/01/2013 09:05

Let's send 'em to the naughty step!

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olgaga · 20/01/2013 00:11

I'm afraid the coalition are "squabbling" about it.

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mam29 · 19/01/2013 13:20

Does this mean vouchers will stay for now?

as have another 2years childcare for 2 under 5s to fund.

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olgaga · 18/01/2013 15:55

Deregulating numbers will certainly not bring the cost of childcare down. Prices will stay exactly as they are. The only difference will be that childminders will be able to look after more children and earn a living wage for the hard work they do 10 hours a day (yes, 10 hours a day Xenia! 8-6pm) - and children will be sat in front of CBeebies more often.

When my friend looks after 3 children, which she regularly does - I think it's one 4yo and two under 3 - she barely gets time to carry out the Ofsted requirements as it is. She's constantly changing nappies, potty training, feeding, putting them down to sleep. She never stops all day, in quiet moments she catches up with her Ofsted-required observations.

She also has to take her own young children to and from school, as most CMs do. Outings are a mammoth task with a triple buggy or having to strap them all into the car when the weather is poor.

The simple fact is, most CMs would balk at looking after more than 3 children anyway.

The only people who will benefit from deregulation will be the owners of private nurseries, who will be able to pack more children in and turn more of a profit. Nursery workers will continue to be low paid, usually young and have only basic training and qualifications.

There's simply no such thing as cheap childcare unless your own family is prepared to do it for expenses only.

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TheDoctrineOfSnatch · 18/01/2013 12:23

Thing is, I'm not sure deregulating numbers will bring prices down.

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lljkk · 18/01/2013 11:57

(Is it legal to quote all that, doesn't it violate their copyright?)

There is a companion article in the Times, which talks about deregulating the childcare industry which would probably reduce costs for all, too. Difficulty is that it puts more responsibility into hands of parents to judge if a childcare situation is safe. I'm not sure if Nanny-state Britain can handle that.

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Xenia · 18/01/2013 08:52

18 Jan
The Times
Childcare tax breaks scuppered by Lib Dems

Apparently it's because most women earn hardly anything, not even enough to pay tax (terrible that that is so in 2013 rather than women earning even more than men - we have a long way to go to get equality)... and that full time working women who with their husbands pay half each of say a £30k full time child care cost would benefit most from a break of tax relief for that cost. Why should they not? What do we continuously protect those who work not very many hours when the squeezed middle work 10 hour days plus often 2 hours commute to keep the part timers in their benefits?


"

Generous tax breaks to help working parents to pay for childcare have been scuppered by the Liberal Democrats, The Times has learnt.

The news will disappoint higher-paid mothers who lost their child benefit this month. They had been hoping to recoup part of the loss. Reports had suggested that the tax breaks could be worth up to £2,000 a year.

The plans have been abandoned because wealthier families would benefit the most. Mothers earning less than £8,105 do not pay tax and so would not be eligible, while thousands who receive tax credits would be excluded.

At a meeting this week of the ?coalition quad? ? David Cameron, Nick Clegg, George Osborne and Danny Alexander ? the Lib Dems insisted that helping these lower-paid families had to be a priority for any extra cash. Many have already been hit by a cut in child tax credits that increased their childcare bills by 10 per cent a week.

The two sides remain deadlocked over what a new childcare subsidy should look like, so the announcement has been put off. It had been pencilled in for last Monday, but is now unlikely to come until the end of the month.

However, details may soon be announced of sweeping deregulation of nurseries and childminders, a move that ministers hope will lead to lower prices. Under the reforms, childminders could be allowed to look after up to five children instead of the current limit of three, and staff ratios at nurseries would be lowered. There are, however, caveats about the type of experience and training required for those allowed to look after more children.

A source close to the negotiations said that the ?red line? for Mr Clegg, the Deputy Prime Minister, had been that the least-well-off had to come first. He is concerned that benefit changes and the introduction of the universal credit will increase disincentives to work for some low-paid families.

?Plans for tax breaks have been effectively killed off but there is still no agreement on funding,? the source said. ?The system is complicated and ministers are trying get the money to the parents who need it most, but it is not proving easy, especially as there is not a lot of new money.?

British families pay some of the highest childcare costs in the world, with on average 27 per cent of income going on nurseries, childminder or nannies. This compares with an EU average of 13 per cent. Despite the expense, quality is variable. Ofsted rates one in four providers as in need of improvement.

The Government spends almost £5 billion a year in subsidies but ministers are struggling to understand what it is all going on.

Stephen Burke, director of the Good Care Guide, opposed the plans for tax breaks, saying that they would only benefit better-off families. But he said that something had to be done to reduce costs or the economy would suffer. ?It?s make-or-break time for British families. The cost of childcare is crippling many families and ensures that work doesn?t pay for many parents,? he said. ?As other European countries show, the answer is for government to substantially increase subsidies for childcare.?

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LilyBolero · 14/01/2013 16:51

I think a tax allowance for those on higher incomes, and child benefit to be limited to a certain number of children.

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Xmaspuddingsaga · 14/01/2013 16:28

The unplanned for costs are things like having to take twice as many days off for children's sickness. Having to heat the house /provide food for the nanny. Also when looking after 2 under 3 our nanny needed respite so used some nursery/ creche hours as well.

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Xenia · 14/01/2013 16:17

The other argument also is that we may want to incentivise high earning women to have babies as their children tend to become high earnig tax payers and not women on benefits. Therefore perhaps give CB only to women who earn over £50k - that would be fun and arguably would meet the state's objective in terms of whose children are likely to pay the most tax.

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Xenia · 14/01/2013 16:16

They are difficult ethical issues. If we have too many people then we may want to ensure it is so expensive to have them (as in China £10k fine if you have more than one etc) people are put off. If you want them to have 5 per family you will smother them in riches for being a good daughter of Mother Russia.

Childcare costs many in London about £25k to £30k a year out of taxed income so about £50,000 gross income. It might cost for one nursery oplace at the cheaper end £14k of taxed income. Of the mother may give up her £25k a year teaching job. Either way it is by far and away the biggest cost of having children. The extra potatoes they eat is tiny by comparison.

I would certainly not be against abolition of all child benefit (I get none now) and tax credits for that matter (given I get none of them).

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LilyBolero · 14/01/2013 15:49

xenia - the comments on milk/food etc are directly in response to the post from lexyma stating that children do not represent an extra drain on the household budget. In my response, I excluded childcare from it, simply because it is so variable - some people will have grandparents to hand who will do it for free, others will be paying private nannies, and every variable in between.

fwiw I think childcare should be dealt with separately - ideally to be a taxable expense.

The telegraph has a good solution to the whole child benefit dilemma, which is to scrap it entirely. But, you then look at personal allowances, because the purpose of a personal allowance is to allow a person to earn a basic subsistence amount before tax kicks in. So if an income is supporting 3,4,5,6 people, it makes sense that they should all have a transferable personal allowance as well.

Then for low incomes, include that amount as part of the universal credit.

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Xenia · 14/01/2013 15:10

But even so the biggest cost is childcare or losing a wage....not matter how much milk they drink (and I am anti milk so I suggest those spending a lot on milk would be better off giving their children tap water)

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Xmaspuddingsaga · 14/01/2013 14:29

Oh watch out Lexy Mae that is what we thought too. (Similar income) the change of having 2 financially cannot be overstated, and it is all sorts of things you may never have thought of.

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Glittertwins · 14/01/2013 11:38

Exactly what I was saying. 2 twins = 1 adult portion!

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ceeveebee · 14/01/2013 09:48

I know - we used to buy maybe 2 pints a week. Now it's 16!!

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LilyBolero · 14/01/2013 09:24

not to mention the sheer amount of milk they seem to get through!!!

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curryeater · 14/01/2013 09:21

And as ceeveebee says, it depends on what you are comparing it to when you say food costs / housing costs don't go up when you have kids. I have never thrown food away, never shopped casually, always used leftovers and emptied the fridge before shopping again, so yes I do notice two hungry little people who don't eat as much as an adult but as ceeveebee says, between them it is about as much as one adult between them for some things; for others, off the scale (eg they both drink cows milk now, in pints it seems, and in porridge, which is something I hardly needed to buy before)

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curryeater · 14/01/2013 09:18

Sorry if I sound bitter.
the other massive expense you can't budge on is housing. It costs a fortune. People who bought at the right time don't get this. People who have to buy now or pay rent are crippled by it.
I never used to give a second's thought to people saying "why do I bother working?" but only now am I beginning to doubt this whole modus operandi. Not seriously, but I can see why people say it. I always thought: better to earn your own money, then you have choices. On benefits you can't change your work situation for more day to day satisfaction (even small amounts of work affect benefits, and a life with no work at all would surely start to pall badly, or so I have found it when unemployed and looking for work); you can't move house easily; you can't have holidays (nothing left over) or plan or save (nothing left over); but actually all those things are pretty much like my life now.
Still I would rather work than not and don't remotely envy those who can't get work, still less those working full time and on benefits to top up low pay.

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Xenia · 14/01/2013 09:16

Yes, having my children 4/5 (twins) was the most expensive thing I could have done.

The thingi s for women or men who go part time it is not just the loss of income it is that in many cases it is hard then to get the promotion you want. You may stop being on track to earn double what you had been earning so you half your pay to go part time and then you lose the change to earn double what you had been earning not just now but for 30 more years...which is why if anyone has to take those risks let it be men.

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ceeveebee · 14/01/2013 09:09

My twins are only 14 mo but I have had to increase portions by equivalent of another adult in the house eg I cook 3 chicken breasts for the 4 of us. Far more laundry liquid plus related electricity and heating on more often as they're at home with nanny.. Also nappies, wipes, cows milk, bread, pears etc all things I never used to buy So I reckon shopping and utility bills are probably up £200 per month. Drop in the ocean compared to childcare costs and reduction in earnings though - nanny costs £20k per year for 3 day week and I've taken nearly £50k salary reduction to go part time. So we're massively worse off than before DCs.

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Xenia · 14/01/2013 09:05

Lexy is right that with under 5s the biggest cost is childcare. Someone paying £18k above. I am sure we paid £25k (3 children under 5, both worked full time , nanny in today's money and even then that would be skimping it compared to the more expensive nannies and had we lived in inner London). It is very expensive and nothing like as expensive as the kit for the baby which we bought at church jumble sales and economised on and the baby only drank my milk for 6 months etc.

Teenagers is not really in the debat as say £20k full time childcare is always going to cost a huge lot more than even the more expensive 14 year old wanting new trainers. They are unlikely to cost £20k a year, even with day school fees they will only just cost that. I suppose my two probably do cost £20k a year plus and even more if you include the cost of additional housing./

However the bottom line is childcare is expensive. In some countries with loads of poverty you can have live in servants who cost hardly anything but none of us want that. Most of us probably do not want 60% tax rates which we might need if we gave free childcare for all. Women who doesn't work would not support that given the higher taxes and nor would the retired so it is not likely to go forward as a plan. So there will be some minimal help of £2k a year for the poor and those on middle incomes paying nearer £20k a year for childcare will laugh at its derisory nature and get back to their hard work hoping long term it will pay off.

I think women in low paid jobs though should consider they coudl get promoted. It is not that rare that if you are on the tills at Tesco and are pretty good you might move up the organisation so do n't lose hope. If you keep a job and are good at it and seek new jobs and promotions long term it can pay off.

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LilyBolero · 14/01/2013 08:58

lexyma - wait till your kids are older, that's when they reaaly start to cost loads (not including child care in that, as that is variable);

ds1 at secondary - £600 a year for a bus pass (no other options, just have to stump up the money every month), uniform costing £100+, once you include sports kit, blazer, tie, jumpers, gum shield, shinpads etc etc etc - it just goes on and on, school trips start to be more expensive - they are 'expected' to do a residential trip either Y7 or Y8, costing several hundred pounds. Then any clubs they do out of school tend to be really expensive too.

They might fit into the household regular budget when little, but it doesn't last long!

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Glittertwins · 14/01/2013 06:02

We've always cooked from scratch and they were weaned on food that we eat. I just think you are being a little naive if you don't think he is adding to the food bill when he will be as the food cooked gradually will not go as far as it used to.

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olgaga · 13/01/2013 20:19

Xenia: If people are lucky to be in careers where there will be progression then keeping working often pays off longer term and protects you

Exactly. So don't expect sympathy from those out of work, or who work for the minimum wage.

Lexy: The only barrier to more employment of parents, male or female, is childcare costs. Everything else is scalable.

Quite.

Which is exactly why there is no point in struggling to work full time and pay for childcare if your earnings are low and you have a job rather than a career with progression. You end up working for nothing - no mortgage, like your single mum on £50,000, just childcare. There is no point working for nothing.

If you're in that position your earnings are always going to be low, unless you are qualified and decide to have a family before you begin your career - then you can expect to earn and progress.

Or you do like I did, (and Xenia's granddad) and have your career, get yourself financially secure, and then have children - but for women that brings the risk of dodgy fertility - I was lucky to have one at age 41.

All I'm saying is: when the Government is giving a clear message that you shouldn't have children you can't afford, they aren't just talking to benefit claimants. They're talking to all of us!

The changes to child benefit aren't really an issue. The lower paid will keep it. We will all see our personal tax allowance rise slightly. The higher paid who use childcare will replace their lost CB through a small tax advantage. We're all in this together!

Except - those earning the most can look forward to a very healthy tax cut far higher than that enjoyed at any other level of earnings.

Which tells you everything you need to know about this Government, and whose interests it serves.

Take note for 2015.

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