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'Eye watering' childcare costs rise four times faster than wages

20-Oct-17
Article By: Angeline Albert

The average cost of childcare for a one-year-old has risen more than four times faster than wages since 2008.

Credit: Postolit/ Shutterstock

Childcare costs have rocketed up in England by 48 per cent for those with a one-year-old child in 2016 when compared to 2008, while average wages only rose by 12 per cent in cash terms. In some areas of the UK, the childcare costs rose by even more – with London childcare rising 7.4 times more quickly than pay and seven times faster in the East Midlands.

Analysis by the TUC (Trades Union Congress) of figures sourced from the Labour Force Survey (LFS) and the Family and Childcare Trust (FCT), has led the union to warn against rising childcare costs which forces parents to spend more of their wages on childcare.

‘Spiralling costs’ and ‘eye-watering’ childcare bills

TUC general secretary Frances O’Grady said: “The cost of childcare is spiralling but wages aren’t keeping pace. Parents are spending more and more of their salaries on childcare, and the picture is even worse for single parents.

“Nearly a million working parents with one-year-old kids have eye-watering childcare bills. There is a real gap in childcare support for one-year-olds until Government assistance kicks in at age two.

“Parents need subsidised, affordable childcare from as soon as maternity leave finishes to enable them to continue working, and so mums don’t continue to have to make that choice between having a family and a career.”

Childcare gap for one-year-olds

Approximately 950,000 working parents in the UK have one-year-old child but most do not get any Government help with childcare costs.

• In England a single parent working full-time (with a one-year-old in nursery for 21 hours a week) spends more than a fifth (21 per cent) of their wages on childcare in 2016, up from a sixth (17 per cent) in 2008.

• One parent working full-time and one parent working part-time (with a one-year-old in nursery for 21 hours a week) spend one seventh (14 per cent) of their salary on childcare in 2016- up from a tenth (11 per cent) in 2008.

• Two parents working full-time (with a one-year-old in nursery for 21 hours a week), spend a tenth (11 per cent) of their wages on childcare in 2016 - up from 8 per cent in 2008).

• A single working parent with a one-year-old in nursery for 40 hours a week needs to spend two-fifths (40 per cent) of their pay on childcare – making it tricky to balance work and family life without working less hours or getting help from family or friends.

’Childcare costs mean it does not pay to work’

Ellen Broomé, the chief executive at the Family and Childcare Trust (FCT), said: “Childcare is as vital as the rails and roads to making our country run: it boosts children’s outcomes, supports parents to work and provides our economy with a reliable workforce.

“For too many parents, however, high childcare costs mean that it does not pay to work. Low-income families claiming Universal Credit typically take home just £1.96 per hour after childcare costs have been paid, and some get even less than this. We must make sure every parent is better off working after childcare costs.”

TUC wants universal free childcare from end of maternity leave

The TUC has 5.6 million working people who are members of its 50 member unions. It is calling for:

• Universal free childcare from the end of maternity leave to help single parents and families – especially younger mums and dads with less seniority and lower pay – to stay in work and progress their careers after having children.

• More government funding for local authorities to provide nurseries and child care.

• A greater role for employers in funding childcare, either through direct subsidy to employees or the provision of on-site childcare facilities.

Neil Leitch, chief executive of the Pre-school Learning Alliance, said: “We know that rising childcare costs remain a significant challenge for families across the country, and this is particularly true of those parents with younger children, who do not qualify for Government funding and attract higher fees as a result of stricter staff: child ratios.

"The TUC is completely right to call on the Government to increased childcare funding, and of course, the private and voluntary sector is absolutely vital to this. Ultimately, unless the Government invests what is needed into the early years sector, it is those working families it has promised to support who will end up paying the price."

Over three-quarters of nurseries have increased fees this year by 4.5%

The National Day Nurseries Association (NDNA) reveals 83 per cent of nurseries have been putting up their fees this year by an average of 4.5 per cent. The chief executive of NDNA, Purnima Tanuku, said the TUC’s analysis made ‘shocking’ reading and were the result of the Government’s policy to extend ‘free’ childcare for three and four-year-olds to 30 hours without adequate investment.

“NDNA has been warning Government that because this policy has been woefully underfunded for years, nurseries have had to push up their fees year on year to parents with children aged two and under. Only some disadvantaged two-year-olds receive 15 hours funded childcare."

Recent research by PACEY (Professional Association for Childcare and Early Years) reveals childcare providers are underfunded on average by £400 per year for every place.

Susanna Kalitowski, Pacey's policy and research manager, said:“Childcare providers are acutely aware of how much parents struggle with childcare costs, and raising fees is usually a last resort. They have now been forced into the unenviable position of raising the cost of caring for babies and toddlers or charging parents of 3- and 4-year-olds for meals and trips. Either way it is hard to see how childcare costs will go down."

The NDNA's chief executive added: “Parents of newborns, particularly in the worst areas of London and the Midlands, are faced with the stark choice of giving up their career or seeing the majority of their wage paying for childcare costs. This is no incentive to get new parents back into the workplace.”

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