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One in five sub £50k income families leave work over spiralling childcare costs

Paloma Kubiak
Written By:
Paloma Kubiak

Families earning under £50,000 are hit hardest by rising childcare costs, forcing one in five parents to quit the workforce. This suggests the early years system is “fundamentally broken”, according to campaign groups.

Childcare costs rather than the ongoing cost-of-living crisis are heaping more financial pressure on families, with many subject to the “£50k parent penalty”, according to research by Pregnant Then Screwed.

The campaign group asked nearly 12,000 parents with children under five years old about the state of childcare in the UK and the impact it is having on their careers.

Six in 10 said they or their partner have reduced their hours due to childcare costs or availability.

But this rises to 67% for Asian parents and 75% for parents of disabled children.

Pregnant Then Screwed said families with a household income of under £50,000 are being hit the hardest, with 76% reducing their hours to make childcare work.

Meanwhile, half of parents can’t access the childcare they need, with a majority 77% saying this is due to the cost.

And these costs have been rising despite the UK already having one of the most expensive childcare systems in the world.

Four in 10 parents claimed childcare costs had risen between five and 10%, while 14% said their fees had risen by more than 10% in the last 10 months.

All this has led to one in two parents saying childcare costs and issues with availability were now “more of a concern than the cost of living”.

For nearly a quarter of parents (22%), they’ve cut back on essential items such as food, heating or clothing to make ends meet. However, this rises to 48% for single parents and 35% for parents of dead, disabled or neurodivergent children or those with a serious illness.

Pregnant Then Screwed also revealed that a quarter have had to use credit cards, borrowed money or have got into debt to afford increasing childcare costs.

In turn, 42% of parents said they’ve reconsidered having more children, while 29% are turning to family and friends for help in bridging the childcare gap.

Indeed, Britain now has the lowest birth rate in the last 20 years.

‘Work does not pay when you have a young child’

Joeli Brearley, founder and CEO of Pregnant Then Screwed, said: “When household income drops below £50k, our data shows that you are statistically more likely to leave the workforce or reduce your hours. This further entrenches poverty and inequality. Our crumbling childcare sector continues to push new families into debt and onto benefits – work does not pay when you have a young child. The cost of having a child today is one that many families cannot bear.’’

Brearley added that the Government’s plan to increase the ‘free hours’ scheme for younger children will only make the availability and staffing crisis “worse”.

“There is little point in affordable childcare, if parents are unable to access it”, she said.

In the March 2023 Budget, the Government announced plans to double spending on the free entitlement to a funded childcare place by September 2025. The programme will offer up to 30 hours a week of funded term-time care to all children in working families from the age of nine months until the start of school. Currently, 30-hour funded places are only available to three and four-year-olds in working families.

Neil Leitch, CEO of the Early Years Alliance, said: “With the upcoming expansion of the 30-hour offer set to disproportionally benefit higher-income families, the inequalities that we are already seeing will only worsen going forward. Worse still, if the offer isn’t funded correctly, we are likely to see providers forced to increases prices for those families not eligible for the funded offers, or risk going out of business entirely.

“It’s clear that our early years system is fundamentally broken. We urge the government to recognise the severity of the situation before the situation gets even worse.”