The UK has the most expensive childcare costs in the developed world
It moved into the top spot this week, with the Czech Republic in second spot and Cyprus in third.
Families in the UK spend an average of 29% of their wages on childcare costs, which is the highest figure of the 40 counties included in the data.
At the cheapest end, Estonia, Latvia, and Italy have the cheapest average costs.
The OECD data is based on full-time childcare costs, assuming a family has two children, one aged two and one aged three.
Childcare costs have been rising steadily in the UK and while there is some help available, many believe it does not go far enough.
Last month, 20,000 parents took part in a nationwide protest to campaign against high childcare costs, which was organised by Pregnant then Screwed.
Yet while parents are struggling, with some parents paying up to 65% of their wages on fees, providers are also at breaking point.
Providers in the early years sector are facing a cut of 8% to their budgets by 2024 and it’s expected this will result in higher fees for parents.
Many schools are also facing financial pressures and two thirds have said they may need to cut teachers or teaching hours to avoid going into deficit in the next academic year.
Record numbers use tax-free childcare
In September 401,000 families – a record number – used the government’s tax-free childcare scheme. It is available to some households who earn at least the minimum wage but under £100,000.
The scheme was introduced in 2017 and up to £2,000 is available per year. Yet this falls far short of average childcare costs which are closer to £8,000 for a part-time place for a child aged two or under.
Laura Suter, head of personal finance at AJ Bell, said: “When the tax-free childcare scheme was launched in 2017, the £2,000 would have paid for nine weeks of nursery fees for a child under two in full-time care, now it will pay for just seven weeks. Nursery costs have risen by more than 20% during that period, while Government support has remained static.
“The difference in London, where costs are highest, is even more stark. The £2,000 a year handout now pays for just over five weeks of full-time nursery for an under-two, compared to almost seven weeks when it was launched in 2017 – as costs have risen 27%.”
Parents of children under three face the highest costs
It comes as separate data from NatWest shows that raising a child to the age of 21 could cost as much as £241,155.
It says there are two distinct life stages, the ‘twos’ and the ‘teens’. Children aged between one and three cost parents the most money, averaging £17,605 per year. These costs are largely made up of childcare fees.
After children turn three, and free childcare hours apply, the costs drop dramatically averaging £8,925 per year until they turn 15.
More than half of those surveyed by the bank say they wish they had been better prepared for the cost of raising a child. Of the 2,000 parents asked, 22% also said they doubt they would be able to provide for their children in the same way their parents had provided for them.
Laura Newman, head of private client advice and investment at NatWest Premier, says: “New parents often assume that children get more expensive as they get older. In fact, our research shows that the cost of raising children dips dramatically from the age of three, only to rise again just before GCSEs.
“The total cost of raising a child might seem alarming, but by knowing when the financial pinch points will come, parents can plan a strategy that will help them to pay for the pricier years.”
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