The Costs of Childcare combined with the inadequacies of the child maintenance calculator can result in unfairness.
The cost of childcare is massive. For a full-time worker with a one year old it may be £1,300 or even more a month, every month, even when you’re on holiday – to keep that vital nursery place. That makes an impossible hole in most incomes – especially if you are paying tax, NICs, the cost of commuting and a few hundred a month off a student loan. There may be virtually nothing left. You may not be able to afford to work. But then you may have to work to pay the bills. You may be working for a net nothing to keep your job open, so when child care reduces you still have it. No wonder young people are delaying having children, opting out or just having one. They cannot square the circle – and it is not because they waste money. They have less disposable income than their parents and grandparents.
If you add a separation into the mix – with both parents struggling to work and keep two homes going, the situation can be dire. Let’s imagine a typical scenario. The father is working full-time and paying child maintenance. He also has some child-related costs when the children are with him. Mum is working 16+ hours a week, caring for the children, getting tax credits and child benefit and just surviving. If she is on a very low income she will get 70% of the work related child care costs paid by additional tax credits. Once she earns too much for that she must pay them herself. Say it is £4.75 an hour per child and there are 2 or three children – she may not earn enough to pay that, she may be worse off. At any rate after the cut off points her tax credits are reduced by 41p in every pound she earns – plus so far as child tax credit is concerned by 20% income tax and her NICs. She is working very hard to stay still and in some cases to go back-wards, depending on the costs of child care.
It is not uncommon when mediating with separating couples to find that the child support does not even cover the costs of the primary carer’s child care costs, without which she cannot work at all. They are effectively a mortgage on that parent’s income, like tax. Yet she’s supposed to work isn’t she? Government policy is directed towards that end. The cost of childcare falls on the parent with whom the children live. That is usually the parent with the lowest income. Take the following example:
Primary Carer Income per calendar month , separated family, Other Parent Op,
typically mother 2 children living mainly with mum typically father
£916 Net earned income, he £60,000 gross; £3,548
she £11,000, assumes no student loans
£149 Child benefit 2 children
-£508 Child Tax Credit, assumes no
Working Tax Credit
£1,573 Total before child maintenance £3548
+£632 Child maintenance calculated by CMS -£632
(assumes no other children in OP’s new home and
1-2 nights pw overnight stays, maintenance could
be a lot less
£2,205 Total after maintenance £2916
-£650 Less costs of childcare –
£1,555 Net income to live £2,916
It can work the other way – in some cases after paying child maintenance the non-resident parent may struggle to meet their own costs and the primary carer can be in a much better position. The problem we have is this one size fits all child maintenance calculator combined with a refusal to look behind that at the net effect in each case. In mediation we look at the net effect of everything and consider together in a problem solving way how to address the issues. Time and again the father in the above scenario will say how silly the result is and has no hesitation is offering to pay all or some of the childcare costs; they are his children after all. Problems mostly arise when parents have got used to thinking adversarially and in terms of how much/little can they get/ get away with. It has become a battle between them in which they have forgotten the real issue – which is how to meet their children’s needs. This is one of the many strengths of mediation compared to the legal route. It is based on interest-based negotiation with a focus on solutions that work for you both and where your children’s needs are central.
Call us on 01908 231132 or info@focus-mediation.co.uk for further information or to book a Mediation Information & Assessment Meeting (MIAM). Read more about family mediation (including our client testimonials) at www.focus-mediation.co.uk