Nursery places in the UK are, as we know, very expensive and are getting more expensive all the time, even though the prices quoted in The Daily Mail don't seem to be significantly higher than what we were paying for our lass when she finished nursery five years ago. It seems fair to assume that these high costs are because of the enormous barriers to entry, separate topic.
And as we know, but as is commonly airbrushed out of the picture, the Tories introduced a great nursery voucher scheme back in the 1990s, which is officially described as 15 hours a week free childcare but by and large, what parents do is fill in a form which the (private) nursery gives them, and the local council then pays the nursery directly for the cost of the first 15 hours of fees, I remember this working out at about £70 a week, I don't know how much it is now (perhaps it varies from council to council?).
These vouchers are non-means tested and administratively no hassle whatsoever, you get the monthly or quarterly bill from the nursery and then they just knock off the value of the vouchers, which gets the cost down to something affordable and/or reduces the break even point where it's worthwhile for Mum to go back to work.
To completely muddy the waters, there are also the Childcare Tax Credits, which are heinously complicated and by and large self-defeating because the upper limit on qualifying costs is artificially low, they are reduced by the vouchers you get and are means-tested, so once you've done the numbers, you end up with £10 or £20 a week at an adminstrative cost of about £10 or £20 a week.
But let us reserve today's ire for the third kind of subsidy. Take it away, rent-seekers:
One of the ways in which the Government helps parents with childcare costs is a voucher scheme which is available through employers and allows mothers and fathers to pay for childcare out of their pre-tax wages. Basic rate tax payers can pay for up to £243 of childcare a month with the vouchers.
Julian Foster, managing director of one of the voucher schemes, named Computershare Voucher Services, called for the limits on childcare vouchers to be increased and said the scheme should be extended to help the self-employed. He said: "(This) would show to this country's working families that Government "gets it". They get that support needs to be widely accessible, they get that household budgets are becoming increasingly strained, and they get that working mothers and fathers - part of the lifeblood of the British economy - need adequate support to raise their families and this country's future."
You do NOT magically get £243 a month in vouchers, it is a salary sacrifice thing, so you are only saving the PAYE on that £243 (which is restricted for higher rate taxpayers according to some tortuous formula), i.e. about £100 a month, taking employee and employer together. And a whole private bureacracy has been built up around these, businesses which actually issue bits of approved paper to employers who enclose them with their employees' pay packets, and then the employee has to remember to keep them somewhere safe until the next bill from the nursery arrives (I'm bloody sure I found some unused ones after the lass had started school, then the nursery accepts the vouchers, recalculates the bill and takes the paper vouchers and sends them back to the scheme adminstrator for the actual cash payment etc etc etc.
What sort of mark-up do these private bureacrats make per voucher? It must be a couple of quid, money which is completely wasted, as are the Childcare Tax Credits and associated administration costs (and grief for parents).
Why not just scrap the employer vouchers and the Childcare Tax Credits and increase the number of "free" hours qualifying for the vouchers to 20 or 25 or something? That way we only have one layer of bureaucracy, being the simplest and easiest one which has stood the test of time and actually gets nursery bills down? And which illustrate that education vouchers are just as do-able, if not more so.
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13 minutes ago
12 comments:
Well with childcare vouchers, the government can reduce them for higher rate taxpayers to show everyone that the 'rich' are taking cuts too. Problem is at the margin, a household with one high income and one low income is likely to withdraw the latter from the labour market at the margin, where work does not pay after childcare costs. A spiteful policy. Doesn't affect me because my wife can't make nearly enough money to pay for childcare, and we're both happy for her job to be raising the kids full-time anyway, but we're all worse off if human capital has to sit at home because of tax policy.
Reminds me of Luncheon Vouchers.
BE
"And which illustrate that education vouchers are just as do-able, if not more so."
There's the answer to your question, Mark.
M, I really don't get this "take away benefits from the high earners" stuff. They're the ones paying for everybody else's benefits. But when it comes to taking away the benefits of owners of high value homes... oo, er!
BE, sadly, teh 15p a day exemption for luncheon vouchers is to be scrapped from 6 April 2013. It's teh end or an error.
B, sometimes i do think that they take a reasonably good idea and then f-ck it up deliberately. Like your comment on AV or Mansion Tax. Apparently, they are even going to completely f-ck up the Universal Credit to show that a Citizen's Income can't possibly work.
Perhaps the Byzantine child tax credits was intended to replace the simple nursery vouchers which weren't providing any jobs for bureaucrats and were providing a dangerous precedent, but, in a piece of classic civil service bungling, they cocked up the f*ck up (or vice versa) and we've ended up with both systems.
B, are you confusing "child tax credits" with " the childcare element of working tax credits"?
No, I meant the childcare tax credits mentioned in your post. Not having any children, I know nothing of these forms of mental cruelty.
B, in that case you are probably correct.
The vouchers are utterly dumb actually. Why subsidise childcare directly? Why not just put the amount on child benefit? Oh sorry, forgot. That would benefit the "problem families" with a stay-at-home mum too.
It is all the most ghastly and muddle-headed State meddling, and I'm really not surprised it was started by bungler Major and pushed forward by Gormless Gordon.
AC, that's a separate topic.
I was saying it is silly to have three separate nursery-subsidy schemes, might as well stick with the simplest and best.
As to your comment, fair enough, but that actually "costs" money. A 50% subsidy for nursery spending doesn't actuall "cost" anything.
Assuming that the vouchers are sufficient to tilt the balance in favour of Mum of one child going back to work, then that's an extra job for Mum and one-quarter of a job in the nursery, both of which are liable to PAYE + tax on profits etc, so the tax which this generates covers the "cost" of the vouchers anyway.
And with the benefit of hindsight, Major was the best PM ever - affordable housing for all! A pity that Labour promptly poisoned this legacy.
Follow your logic a bit further. Let's pay a subsidy for all low-paid work, to encourage the unemployed to take those low-paid jobs. Not going to work, is it? Something for nothing never does.
AC, You clearly don't understand the first simple point I was making (that of the three subsidy schemes, the nursery vouchers are by far and away the best) and neither do you understand the basic maths point that nursery vouchers cost the taxpayer net nothing.
Your insinuation that nursery vouchers are a subsidy is completely incorrect - they are merely a refund of (some of) the tax which the Mum and the nursery nurse (and their employers) are paying on the overall added output.
So in theory, we could achieve the same thing by exempting nurseries from tax and increasing Mum's personal allowance to (say) £20,000.
This might be a better way of doing it, or it might be a worse way of doing it, but it comes to much the same thing.
The real subsidy to nurseries is the barriers to entry, like I said, that's a more specialised topic.
And by the way, it really pisses me off when people merrily accuse me saying things I never said and then criticising me for having said them. I have never, ever said that we should pay a subsidy for low paid work. To whom exactly?
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