Childcare fees now higher than mortgage, but rise slows

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Families pay on average more for childcare than their mortgage, according to the annual childcare costs survey by the Family and Childcare Trust.

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However, the survey found that there has been no rise in the cost for nursery for a part-time place for children aged two and over in England.

The research shows that fee increases have largely been for provision for under-twos, although there are sharp regional differences.

In Wales the cost for a place for an under-two has risen by 11.7 per cent,  and in Scotland by 4.8 per cent, but in England by just 2.2 per cent.

The highest increase has been in Wales where fees have risen by 13 per cent in the past 12 months for children aged two and over, and by 8.2 per cent for this age group in Scotland. The average rise for Britain as a whole for a part-time nursery place over two is 1.5 per cent.

Meanwhile, childminder costs have risen in England and Scotland by more than 4 per cent, but not in Wales.

The report’s author Jill Rutter told Nursery World, that the research showed, ‘The system isn’t working and we haven’t acted to fill the gaps.’

Ms Rutter said that the higher costs for Scotland and Wales could be attributed to the fact that they have fewer nursery groups, leading to gaps in the market and more rural areas, which tend to have 'slightly more expensive' childcare.

A family of four with one child in a part-time nursery place and another in an after-school club typically spends £7,549 a year on this compared to the average UK mortgage of £7,207.

During the last year nursery costs for under-twos have risen across Britain, with an average increase of 3.3 per cent.

However, this is slightly lower than last year’s rise of 4.2 per cent for the equivalent provision.

In the past five years, the cost of 25 hours of childcare for a child under two has risen by 27 per cent so that parents’ annual bill for this provision is £1,214 more in 2014 than it was in 2009, while wages have stagnated.

The report, now in its 13th year, is based on a survey sent to all Family Information Services in England and Wales and Children's Information Services in Scotland on the costs and availability of childcare in December 2013. Responses were received from 184 local authorities.
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 Childcare availability

Aside from cost, the survey also shows that there continues to be a childcare shortage in many local areas, particularly for after-school childcare, disabled children, and families living in rural areas.

Just under half of local authorities (49 per cent) had enough childcare for working parents. Three-quarters of local authorities have a shortage of childcare for disabled children.

Anand Shukla, the Trust’s chief executive, cited research by the Organisation for Economic Co-operation and Development that shows that parents in Britain use more than a quarter of their salaries on childcare.

‘When even part-time childcare costs outstrip the average mortgage for a family home – and many parents have to spend more than a quarter of their income on childcare – it’s clear that our childcare system isn’t fit for purpose,’ he said.

The Family and Childcare Trust wants to see all political parties commit to a long-term childcare strategy that delivers for parents, providers, and crucially, for children, he added.

Julian Foster, managing director at Computershare Voucher Services, who sponsor the annual childcare costs survey, said, ‘In the short-term employers can help working parents through offering childcare voucher schemes and flexible working, but long-term, the system needs to change.’

The Professional Association for Childcare and Early Years, said that while it recognised the difficulties families faced, the rise in costs was not just down to settings charging higher fees.

Commenting on the findings Liz Bayram said, ‘Indeed, most providers have kept any increase to a minimum while having to contend with greater operating costs in their setting and the cost of delivery of free early education for all three and four year olds not being met by the fee local authorities pay providers. Whether a nursery or childminder, people working in childcare are not making a profit and costs are rising because providing quality childcare is expensive.

‘In many other countries parents only ever pay a proportion of their childcare costs with Government (and in some instances employers) contributing too. To help more parents access affordable, high quality childcare, Government needs to invest appropriately in childcare and recognises the economic benefit of supporting families to balance work and caring responsibilities.’

Labour’s shadow minister for childcare and children Lucy Powell MP said, ‘Under David Cameron childcare costs are soaring, adding pressure to family life and shutting parents out of work. At the same time as sky-high costs, there are fewer places available and wages are down £1,600 a year. Rather than help families facing a cost-of-living crisis, this Tory-led Government has slashed tax credit support for childcare and hit family finances so that work doesn’t pay.

‘Labour will help working families with the extension of free childcare for three and four year olds with working parents from 15 to 25 hours and guaranteed access to wraparound childcare through primary schools.’

Dr Steven Toole, head of policy at 4Children said, ‘The cost of childcare remains a major challenge for too many families, resulting in some parents getting into debt and others having to give up or being prevented from taking up work.

‘As we emerge from the economic crisis, we need to invest in making Britain great for families and radically reshaping this country’s childcare offer is a key part of this.’

4Children is calling for a guarantee of universal childcare for all families for children aged 0-14.

'Flawed system'

The Pre-school Learning Alliance said that the problem was lack of Government investment and that 'relying on providers to prop up a flawed system' was not sustainable.

Chief executive Neil Leitch said, 'Let's be clear on this: these real-term cost reductions are due entirely to the efforts of early years providers, many of whom continue to subsidise perpetually-underfunded free entitlement schemes, even though this often means an ongoing struggle to break-even or in many cases, operating at a loss. It is their unwavering commitment to supporting families and providing high-quality affordable childcare that has resulted in this real-term reduction in costs.'

The National Day Nurseries Association said that the funding system for nurseries and parents was 'not fit for purpose'.

Chief executive Purnima Tanuku said the figures showed how 'hard the nursery sector has worked to keep costs down for parents. But they are struggling to do this against rising wage bills, utility costs, business rates and the increasing financial gap in free provision.'

Ryan Shorthouse, director of think-tank Bright Blue, said, 'Another year and childcare costs remain punishingly expensive. As a result, too many parents are locked out of the labour market and too few children benefit from high quality pre school education, the most important part of the education system.

'Something radical needs to be done. Its fantastic that the three main political parties are committed to extending the free entitlement. But, following this route, it will take years before we get to the universal, high-quality childcare system we need now. Parents should be able to access Government-backed loans, which they repay over a longer period of time, allowing them to smooth their  costs for childcare and making it much more affordable on a monthly basis.'

Commenting on the survey findings, education and childcare minister Elizabeth Truss said, 'This survey shows that the cost of childcare in England has fallen for the first time in 12 years in line with the department's Early Years Parent Survey from earlier this year.
 
'After 12 years of consistently rising prices, costs in England have stabilised for the first time - In fact once inflation is taken into account costs for the majority have actually fallen. This means more parents are able to access affordable childcare and support their families.
 
'These reductions contrast with rising costs in Scotland and Wales, highlighting the difference this Government’s reforms are making.'