Childcare fees struggling to match costs

The drop in the amount that parents can claim for childcare costs through Working Tax Credit from 80 per cent to 70 per cent is also having an effect.

An analysis by the Daycare Trust of HMRC figures found the average claim for the childcare element of WTC has fallen by more than £10 a week and that 44,000 fewer parents are receiving help for childcare costs through tax credits since the cut ast April.

However, comments on Nursery World's Facebook page reveal the dilemma faced by nurseries, and childminders in particular, who are wary of putting up their fees despite the fact they face soaring costs themselves.

Some childminders revealed that they have not put their fees up for three years and one commented that in ten years she had only increased fees by £1 an hour.

Nottingham nursery group Alphabet House Day Nurseries, which has four settings, and is owned by Tony and Marie Brentford, review their fees annually and charge between £160 and £185 a week for a full-time place.

Jacqui Mason, managing director of Children1st@Breedon House, which has 15 nurseries, said, 'We are very conscious of the difficulties many of our parents are experiencing financially. Therefore we kept our increase to a minimum 2.5 per cent. This increase has not covered our real costs.'

Ms Mason said that in cases where children receive the free entitlement, parents have cut back on childcare or are using family to help outside the grant funded hours.

Rebecca Martland, an 'outstanding' childminder from Worthing, West Sussex and an EYP, says she has noticed that parents are increasingly struggling to pay for childcare since tax credits were cut.

'I've had a number of parents make initial enquiries and then feed back that they are having to either not go back to work or use grandparents due to the reduction in tax credits.

'I act as a vacancy co-ordinator for the local childminding group and I am seeing this pattern repeatedly with the enquiries we receive via our website.

‘I have a parent who planned to bring her child to me two days a week and have grandma provide care for one day, but has now cut my hours down to one day and is working on a Saturday instead to save money.’

She added, ‘My costs are usually 50-60 per cent of my income, after expenses, but before tax and national insurance. Having recently completed my tax return for 2010-11 my net profit worked out at around £5 per hour, well below minimum wage.’

Heather Langridge, owner of York Nurseries and Sunflowers Childcare, said that tax credits should be paid directly to early years settings.

She said, 'Parents are taking longer to pay fees and we have now had to engage a professional credit controller to address these issues, which has also increased our costs.'

She said that some parents were becoming 'serial jumpers - running up debts and then leaving and moving on to another setting.'