Childcare costs families a third of income

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Research by the Organisation for Economic Co-operation and Development (OECD) reveals that the cost of childcare in the UK accounts for more than a third of a couple’s average household income.

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Families in the UK spend a large proportion of household income on childcare

The report on social indicators, focusing on barriers to employment, found that couples in the UK are spending 34 per cent of their household income on nurseries and childminders.

This figure is more than double the average of 13 per cent across all OECD nations, and more than three times higher than spending in certain European countries including France and Germany.

Rising childcare costs are cited as a predominant cause of unemployment among young women. Women are 1.4 times more likely to become NEET (not in education, employment or training) than men on average.

The OECD found that while poor health is the single most widespread cause among men, more than half of NEET women ascribe their inactivity to care-giving and family responsibilities.

Lone parents were also found to be particularly affected by the cost of childcare. In the US, Ireland, United Kingdom and New Zealand, childcare costs for a single parent can account for between one-third to a half of total income.

The report advises that ‘affordable childcare and child-friendly employment arrangements are key requirements for greater labour market participation among young mothers.’

As highlighted by the research, NEETs are not only more likely to have lower educational attainment and skills, but are also more likely themselves to have parents with low educational attainment and parents who are out of work.

The OECD suggests that ensuring access to high quality childcare can, therefore, help to break the cycle of disadvantage from one generation to the next.

Countries which are stated by the OECD to offer exemplary childcare provision include Northern European nations.

Denmark operates a system whereby municipalities are obliged to offer all children older than six months a place in publicly-subsidised childcare.

In Sweden, full time childcare is offered in cases where both parents are employed or in education.

Other countries provide additional support for lone parents with Iceland offering reduced childcare fees, and regions of Belgium providing priority access to childcare services for single parents.

In contrast, this year’s childcare survey by the Family and Childcare Trust found that Just 45 per cent of councils in England had enough childcare for parents who work full-time.

Megan Jarvie, head of policy and public Affairs at the Family and Childcare Trust, said ‘As this OECD report shows, the UK’s eye-watering childcare costs can cause a barrier to work for parents, particularly mothers.

‘Our research has found that a part-time nursery place for a child under two costs over £6,000 per year.

‘While some UK parents can expect a relieving drop in the financial burden on their shoulders in 2017 with the rollout of the Department for Education’s 30 hours free childcare offer for working parents and Tax-Free childcare, further reform is needed.’

Iain McMath, CEO of Sodexo Benefits and Rewards Services said, ‘These figures from the OECD highlight the huge childcare crisis the UK is currently facing.

‘Current government schemes to help those on a lower income get access to free childcare are directly forcing up the cost of childcare, by putting huge strain on the nurseries themselves.

‘As a result, many nurseries are closing due to lack of funding, meaning there are less places available and, those that are, are becoming more expensive.

Making sure all parents have access to good and affordable childcare is essential if, as a nation, we want to be encouraging parents back into the workplace.

Research from Sodexo Benefits and Rewards Services, shows that, compared to Childcare Vouchers, 55 per cent of two children families will be financially worse off under Tax-Free Childcare, and this increases to 65 per cent among basic rate tax payers.

Combine this with the rising cost of nursery care, it is likely that it will no longer make financial sense for many parents to go back to work.’

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