Summer holidays need not spell financial hardship for parents
Childcare costs are rising at an alarming rate, and the coming six-week break means additional strain on incomes. But, Chiara Cavaglieri reports, there are ways of making the time off affordable
Sunday 03 July 2011
We may envy school children their six-week summer holiday.
But for the parents it is a trying time with rising childcare costs and, more often than not, simply no idea how to keep their offspring busy without paying through the nose.
The 2011 childcare costs survey from the national charity Daycare Trust shows that parents face an increasingly difficult challenge. In England, the cost of a nursery place for a child at least two years old is up 4.8 per cent, and for a child under two, parents are paying £5,028 for 25 hours' nursery care per week.
The most expensive nursery in this year's survey, located in the West Midlands, costs £11 per hour, equating to a staggering annual bill of £14,300 for the same amount of care.
To cut costs, first of all, use up any entitlement to free childcare. In England, every three and four-year-old is eligible for at least 15 hours per week with a registered childcare provider, whether it's a playgroup, nursery or childminder. Then scout around for free or subsidised summer clubs offered by local schools, even the ones your child doesn't attend, churches, leisure centres and, crucially, your local council.
"Our advice to parents is be organised and plan your holiday childcare as early as possible, as good services will fill up quickly. Local authorities can also help you find suitable local holiday childcare, so contact your family information service for more information," says Anand Shukla, chief executive at Daycare Trust.
You may be surprised by what you find. For example, the Summer in the City 2011 programme in Kensington and Chelsea for under 19-year-olds features events such as archery for beginners, a carnival arts course, digital video making and football for girls to name just a few, all either heavily subsidised or free.
This summer, National Citizen Service (NCS) is offering 11,000 places for Year 11s in England for a three-week residential course costing only £50, which includes two weeks away from home and the chance to work with your local community and take part in outdoor activities such as mountaineering, canoeing and abseiling. Details of the NCS projects in different areas are available on Direct Gov (direct.gov.uk).
YHA England and Wales also runs Do It 4 Real camps (doit4real.co.uk) across England for 10 to 19-year-olds which used to be subsidised by the Department for Education. This funding has now been withdrawn but prices are still competitive, costing from £99 for a two-night stay, up to £349 for seven nights which includes all activities, food, snacks, transport and entertainment. There are camps of all different types and prices all over the UK so it is well worth investigating.
In 2009 Richard Dawkins, author of The God Delusion, hit the headlines when he subsidised the opening of Camp Quest UK, a summer camp for atheists. Located in Essex, Malvern and Somerset, the camps cost from £250 but reduced rates are available to parents who would otherwise struggle and all parents are free to pay in instalments.
Also, if you have more than one child you may be eligible for a discount if you send them together. Just make sure the camp you pick is licensed by the British Activity Holiday Association and that any activities are licensed by the Adventure Activity Licensing Authority.
When it comes to paying for childcare, check your entitlement to any benefits or tax credits and then see if you can sign up for the Government's childcare voucher scheme. This allows you to pay for childcare from pre-tax earnings, so you don't pay tax or national insurance on these fees.
The scheme works by salary sacrifice, so you give up £1,000 of your salary for vouchers, but for a basic-rate taxpayer it would really costs only £700 when you consider the tax saving. This isn't open to every working parent – you must be paid via the PAYE system and your employer needs to be registered for the scheme – and if you are on lower income it could cut the tax credits you are eligible for so it may not always be worthwhile.
For many parents, however, these vouchers are of huge benefit and the great news is that they are far more versatile than you might think. They can be used to pay not only for traditional nursery childcare but also for other childcare providers as long as they are registered with Ofsted.
"Many parents do not realise they can use them towards the cost of a range of activities for the kids, including holiday and adventure camps, activity clubs and after school clubs.
"It is always advisable to ask if vouchers are accepted, to ensure you are not missing out financially," says Julian Foster, managing director of childcare voucher provider Computershare Voucher Services (CVS).
In fact, recently CVS quizzed 1,000 parents about vouchers and the results showed surprising levels of ignorance. More than half of the parents said they didn't know they could use vouchers for these types of activity, assuming they were for traditional daycar. In addition, the survey also showed that only 1 per cent of all childcare vouchers used by parents in the past year were put towards summer holiday clubs and activities; and only 9 per cent for after-school clubs.
Anand Shukla, Daycare Trust
"For many parents, the cost of childcare over the summer holidays is the equivalent of paying for a family holiday abroad. It's important that parents ensure they access any financial assistance that they are entitled to, such as working tax credits if they are using a registered childcare provider."
Allowances: Ease the pressure on your bank balance
First of all, use up any entitlement to free childcare. In England, every three- and four-year old is eligible for at least 15 hours per week with a registered childcare provider, whether it's a playgroup, nursery or childminder.
If you are not yet claiming for child benefit, request a claim pack from HM Revenue & Customs. This is worth £20.30 for the eldest child and £13.40 for any subsequent children until they reach 16, or 20 if they are in full-time education.
You can claim for child tax credit for a new baby, any child living with you until age 16, or 20 if they are in full-time education. The amount you receive is based on separate elements and depends on your income, but the maximum family element is worth £545 a year and the child element is worth up to £2,555 per child. If your family income is more than £15,860, the child element will be reduced at a rate of 41 per cent, but you can earn up to £40,000 before the family element is reduced at the same rate.
If you and your partner work at least 16 hours or more per week, you may also be able to claim for help paying childcare (known as the childcare element of working tax credit). You can get help for up to 70 per cent of your childcare costs, up to a maximum limit of £122.50 per week for one child and £210 per week for two or more children.
Childcare vouchers allow you to pay for childcare directly from your gross salary. Each parent can claim a maximum of £243 of vouchers a month which can be used to pay for any Ofsted-registered provider. Be warned that childcare vouchers can impact on your eligibility for tax credits so use the HM Revenue & Customs calculator first (hmrc.gov.uk/calcs/ccin.htm).
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
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