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Childcare costs soar ahead of inflation

Kit Klarenberg
Written By:
Kit Klarenberg

Families are now better off if one parent gives up work to look after their offspring, according to the Family and Childcare Trust’s annual Childcare Costs Survey.

The survey reveals that the cost of childcare has spiralled in every area, and for every demographic, concluding “the reality is that for too many families it simply does not pay to work.”

For example, five years ago, the average fee for sending a child to a nursery on a part-time basis was around £4500 – today, that figure is £6,000. The average weekly cost of a part-time childminder is £104.06 (£5,411 annually), an increase of 4.3 per cent on last year alone.

The survey also highlights that while successive governments have invested heavily in childcare, shortfalls in provision are increasing significantly. The childcare budgets of families in lower income brackets, even those claiming all available child benefits, are still short £52.50 every week at a minimum.

The report proposes a number of causes for the financial challenges faced by parents: Nurseries, childminders and other care providers have begun to increase prices again, having cut rates during the recession. Also, local governments are also failing to provide adequate healthcare provisions, despite legal obligations; the findings indicate that only 43 per cent of English councils fulfil their childcare provision requirements (a fall from 54 per cent last year).

Political reaction has been critical – both of the report, and the government.

“This report neglects the record amount of fully funded childcare we are giving,” a spokesperson for the Department for Education said. “Based on the FCT’s own figures, our free entitlement will save the average eligible family £2,500 per year for each child.”

Alison McGovern, the shadow minister for children, said a Labour government would extend free childcare for working parents from 15 to 25 hours weekly, and deliver increase childcare places by 50,000.

Childcare nursery costs have risen by over 5 per cent during the last year alone – and now stand at over £6,000 per year – meaning that parents are being forced to make drastic decisions regarding their finances and employment,” said Iain McMath, chief executive of Sodexo Benefits and Rewards Services. “The rise in childcare costs outstrips inflation and regularly exceeds mortgage expenditure as the biggest strain on family income. It’s a situation that threatens not only household budgets, but also the wider economy, since it pushes many parents towards abandoning work and staying at home.”

“The government has taken steps to address this problem by holding a childcare consultation to determine how childcare vouchers will be offered after the 2015 election,” he continued. “Existing employer-led childcare voucher schemes can currently save each parent up to £933 per year, contributing £1,866 to a family when both parents are working. On the other hand, the proposed Tax-Free Childcare Scheme is designed to save parents up to £2,000 per year, but in reality the average saving has been estimated at just £600. Therefore, for many parents, the incentive will be to start receiving childcare vouchers before the current cut off point in autumn 2015.”