Childcare costs outpace wages by up to 7x
For parents with a one-year old child, nursery provision has grown four times faster than their wages. Between 2008 and 2016, the average cost of placing a child under the age of two in nursery grew by 49%. During the same period, wages for parents with a one-year old child grew by just 12%. In real terms – not adjusted for inflation – wages have fallen.
The gap was largest in London, with childcare rising 7.4x faster than pay between 2008 and 2016. The East Midlands saw a similar gap, rising 7x quicker.
On average, 21 hours of nursery provision cost around £67 in 2008. By 2016, that had risen to £99. In London, the cost of childcare for under-twos has grown by 59%. There is no region where the cost of childcare isn’t growing faster than wages. Even in the east of England, where the gap is the slowest, childcare costs grew almost three times as quickly as wages between 2008 and 2016.
The TUC focused on one-year-olds because most of the 950,000 working parents with one-year-olds do not get any state help. When children reach two, government support kicks in – two-year-olds are entitled to free education and free childcare if their parents receive benefits and all three and four-year-olds are entitled to either 15 or 30 hours of free childcare. See YourMoney.com’s Childcare scheme for more information.
The TUC is calling for universal free childcare from the end of maternity leave or shared parental leave. It said this would help single parents and families, especially younger parents with less seniority and lower pay, to stay in work and progress their careers after having kids. It said there needs to be more government funding for local authorities to provide nurseries and childcare.
It also urged for a greater role for employers in funding childcare. This could either be through direct subsidies for employees, or by providing on-site childcare facilities.