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Half of single parents have been forced to borrow money from friends, family or banks to pay for childcare in the last two years, according to a new study.
The report by Gingerbread Paying the price: The childcare challenge shows the cap on the amount parents can claim back in childcare costs, means that even with the extra help set to be rolled out under universal credit – for many single parents it still won’t make financial sense to work more hours.
Single parents facing very high childcare costs – for example, those living in London and the south-east – will be worse off if they move from part-time to full-time work, according to the charity.
Gingerbread chief executive Fiona Weir said: “Childcare costs are putting single parent families under severe financial strain. Childcare just isn’t affordable for many and it is very worrying that single parents are having to turn to friends and family banks and credit cards to try and cover costs.
“We welcome Government plans to increase the amount of support available – but the cap on costs means too many single parents will see little benefit. The Government must honour its commitment to make work pay and swiftly bring in extra financial support – parents can’t afford to wait any longer.”
Although low-income parents will be able to claim up to 85 per cent of costs under universal credit, this will still be capped at a limit which has remained unchanged since 2005: £175 for one child and £300 a week for two or more children. Since then the average cost for a part-time nursery place has increased by around 70 per cent.
Single parent Karen, from Surrey, who has two children, aged four and five, said: “I’m living on my overdraft. Although tax credits do help with childcare costs, the expense is still crippling. Childcare costs are my biggest monthly outgoing. I'm lucky to work in a school so it means I don’t need childcare for my daughter during the holidays, but money is still really tight.”
Neil Leitch, chief executive of the Pre-school Learning Alliance, said: “We are greatly concerned, but unfortunately not surprised, by the findings of this survey.
“The Government continues to claim that tackling rising childcare costs is one of its top priorities. If this is the case, how can it be that nearly half of single parents have to borrow money to pay for childcare?
“For far too long, the Government has refused to address the underlying cause of childcare cost rises in this country: inadequate funding. With Government funding only covering the cost of four out of every five childcare places offered under the free entitlement scheme, it is inevitable that this shortfall will be passed on, at least in part, to parents.
“As the report highlights, existing support via universal credit is limited in the help it can provide parents – and the same is true of the new tax-free childcare scheme, which is a short-term solution to a long-term problem. Ultimately, if the Government is to deliver an affordable, quality and sustainable childcare sector, it simply must address funding shortfalls – anything less is simply tinkering around the edges.”
Gingerbread is calling on the Government to raise the maximum amount of childcare costs that low income families can claim, to reflect the actual costs families face; to bring in the extra support in Autumn 2015, at the same time as tax-free childcare and to carry out a review of childcare support systems to check they are fit for purpose in delivering affordability for all.