Low-income families priced out by spike in cost of childcare

(DAVID SANDISON)

Poor parents are being priced out of nurseries and forced out of jobs as childcare costs rise more than twice as fast as the average wage.

While pay grew by 2.1 per cent during the past year, a survey has shown that the cost of a nursery place for a child aged two or over increased by 4.8 per cent during the same period.

Parents of younger children now face an average annual expenditure of £5,028 for 25 hours of nursery care a week in England. This rises to as high as £6,164 in London.

The most expensive nursery in the research was in the West Midlands. Parents with children attending the centre, which charges £11 per hour, pay £14,300 per year for 25 hours of care a week. The nursery was not named.

The new figures came from a survey of Family Information Services by the Daycare Trust. The charity's acting chief executive, Anand Shukla, said that they were of particular concern given the forthcoming squeeze on the working tax credit, which currently covers 80 per cent of childcare costs for low-income working families. From April, this will be reduced to 70 per cent, a decision the Daycare Trust wants reversed.

"When parents sit down to calculate their family finances and see childcare costs increasing far faster than their wages, it is no wonder they may think twice about the economic sense of staying in work," Ms Shukla said. "These high, rapidly rising costs are particularly significant given the number of people not receiving cost-of-living pay increases this year, the increase in VAT, and rising costs of other household goods, particularly food and fuel."

Local authorities are legally obliged to provide sufficient childcare. Yet three-fifths of the Family Information Services that responded said that parents had reported a lack of available childcare.

The data also revealed a startling lack of provision across the country for disabled children and those with special needs. Just 11 per cent of respondents said there was adequate childcare available in their area for these groups.

There is also a dearth of care for children aged 12 and over, with suitable care available in 14 per cent of areas.

In response to the information, Children's Minister Sarah Teather said: "I understand that parents will be concerned by the rising cost of childcare. The Government is committed to providing financial support to families to help them return to and remain in work. One of the first things we did as a new Government was to extend free early education to 15 hours a week for all three and four-year-olds, and we have also extended this offer to the most disadvantaged two-year-olds from 2013, with additional funding available to local authorities next year.

"Support for families through working tax credits remains generous and will continue to make childcare more affordable for working parents."

Case study: 'We are at the mercy of our childminder's rates'

Veronique Boisvert

Ms Boisvert has two children, aged four and one. "Our childminder ups her prices every six months," she says. "They are all very expensive in our neighbourhood so we can't shop around easily. We are at her mercy when it comes to price, yet we're also dependent on her.

"Our income is above the threshold for tax credits, but we are not so rich that it doesn't matter. Our monthly income does not cover all our expenses. We have some savings, but that isn't a sustainable situation if the costs do not stabilise.

"We asked family members to stay with us to look after our baby so we could delay putting him with a childminder full-time as much as possible, but they live so far away that it wasn't really an option. We have a 13-year-old car that is a hand-me-down from my husband's parents. We had planned to replace it because it's about to die but we don't have enough savings. I suppose this what people mean by the squeezed middle."

Childcare by numbers

£5,028 Average yearly cost of 25 hours a week at a nursery for under-twos in England

£14,300 The annual cost of part-time care to parents at the most expensive nursery

£118.54 The average cost of 25 hours of nursery care for under-twos in London