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Cost of childcare surges to £122 a week leaving parents 'treading water', report finds

Families with two working parents in London having to shed out more than £7,600 a year for child under two to go to nursery, which campaigners warn is 'locking' more people out of work

May Bulman
Social Affairs Correspondent
Tuesday 27 February 2018 19:23 GMT
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The average cost for a part-time nursery place for a child under two has increased at double the rate of inflation, now standing at £122 a week - or more than £6,300 a year
The average cost for a part-time nursery place for a child under two has increased at double the rate of inflation, now standing at £122 a week - or more than £6,300 a year

The cost of childcare in Britain has surged to double the rate of inflation leaving many families “just treading water” as parents struggle to afford the rising costs in order to go to work, a new study shows.

The average cost of a part-time nursery place for a child under two has soared by seven per cent in the past year to £122 a week, or more than £6,300 a year, according to the report by the Family and Childcare Trust.

Following the roll-out of new government support schemes in 2017, most parents are now entitled to some help with childcare costs – but the Trust says a “confusing hotchpotch” of seven different types of support means families are at risk of missing out on the help they need.

Many working parents using the new tax-free childcare scheme – which offers £2 for every £8 parents pay for childcare up to a maximum of £2,000 per child per year – and the 30 hours of free childcare offered for three- and four-year-olds, which was rolled out in 2017, will be spending less on childcare this year. But their savings are likely to dry up if prices continue to rise at the same rate.

The highest prices for childcare are for youngest children between the end of paid parental leave and when the child turns three. This is the period when the least financial support is available to parents.

A household in inner London where both parents work, meaning they are not eligible for any out-of-work benefits but receive tax free childcare, has to shed out more than £7,600 a year for their child under two to go to nursery. The cost of a childminder for this family would amount to £7,238 for the year.

Parents with children under three on lower incomes will not be receiving additional support this year through tax-free childcare and so are likely to see their childcare costs rise, the report warns.

Lower income families also risk being worse off working more hours. They can get help with childcare costs through the benefits system, but the average cost of a full-time nursery place significantly outstrips the maximum support available by £60 each week.

Prices also vary significantly across the country. In inner London – the most expensive region in the UK – the price of a part-time nursery place for a child under two is £184 per week before tax-free childcare – 80 per cent higher than in the North West.

Even families that are eligible for the 30 hours offer for three- and four-year-olds may not receive the support they were expecting, as just half of local authorities in England report having enough childcare places for working parents to access their free 30 hours place.

Ellen Broomé, chief executive at the Family and Childcare Trust, said: “Childcare is as vital as the rails and roads, it supports parents to work, boosts children’s outcomes and provides our economy with a reliable workforce. Too many parents remain locked out of work by high childcare costs and low availability.

“New government investment is welcome, but this year’s childcare price surge shows that without root and branch reform, many families will be left just treading water.

“The Government need to streamline the current hotchpotch of childcare support schemes. We need a simple and responsive childcare system that makes sure every parent is better off working and childcare quality is high enough to boost children’s outcomes throughout life.”

The report comes after analysis published last year by the Trades Union Congress (TUC) revealed that in England the cost of childcare for young children had risen more than four times faster than wages since 2008.

It found the average wages of parents with a one-year-old child rose by 12 per cent in cash terms in the eight-year period, while their childcare costs shot up by 48 per cent in the same period.

In some parts of the UK the cost of childcare had risen by even more, increasing 7.4 times more quickly than pay in London, seven times more quickly in the East Midlands and 4.8 times more in West Midlands.

Angela Rayner, Shadow Education Secretary, accused the Government of refusing to give local councils the investment needed to give families the support they need.

“The Government’s failure to provide free and high-quality childcare to those who need it most will keep many mothers locked out of the labour market, as rising childcare costs mean it doesn’t pay to work,” she added.

Cllr Richard Watts, chair of the Local Government Association’s (LGA) Children and Young People Board, said: “Councils remain concerned that the funding levels available for the free entitlements are not sufficient, which could potentially lead to fewer providers offering places, reduced quality, or increased costs for children using hours outside of the entitlements.

“We support the Family and Childcare Trust’s suggestion that spend on childcare could be reformed to create a simpler, more efficient system. As it stands, different schemes have different aims, and it can be difficult for parents to know the best option for their family.”

He added that reviewing early years support in its entirety would help to identify whether investment was helping to “reduce inequalities, improve social mobility and get better results for children and their families”.

Minister for Children and Families, Nadhim Zahawi, said: “Thousands of families are accessing high-quality, affordable childcare and the most pleasing finding in the Family Childcare Trust’s report is that parents are now spending less of their wages on that childcare as a result of the steps this government has taken.

“There are always challenges when implementing any new policy but we are investing record amounts in childcare – around £6bn a year by 2020 – and are working with the sector, which has responded well to the 30-hour rollout, to address them.

“Our 15 hours offer for the most disadvantaged two-year-olds is giving these children access to early education and we know that take up of this offer is increasing.”

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