Working families' childcare costs rising faster than wages

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The TUC is calling for subsidised childcare from the end of maternity leave, as research reveals childcare fees have risen three times faster than wages over the past ten years.


The TUC wants the Government to bring in subsidised childcare from the end of maternity leave

The union’s analysis claims that childcare fees have risen by 52 per cent since 2008, while wages have risen by 17 per cent during the same time period.

It says that there is currently a real gap in childcare support for one-year-olds until funded childcare starts at two or three-years-old. It says that this would enable parents to continue working and mean that mothers don’t continue to have to make a choice between having a family and a career.

Fees in England are now on average:

  • £236 a week for a child under two in nursery, compared to £159 in 2008
  • £232 a week for a child over two in nursery, compared to £149 in 2008

In terms of regional difference the research finds that over the past ten years the growth in nursery fees for families with a full-time and a part-time working parents has outstripped wages the most in the West Midlands, followed by the South East and the North East.

The  TUC says that its analysis shows that despite funded early education and the introduction of Tax-Free Childcare families still face huge childcare bills.

To highlight the shortfalls it gives an example of parents with a three-year-old and a 1-year-old, claiming that a family on average earnings (with a parent working full-time and a parent working part-time) has to pay more than £4,700 a year to cover fees. A low-income working family (with a parent working full-time and a parent working part-time) would pay nearly £2,000 a year.

Shortfalls are higher for single parents it says, with a single parent on average earnings (working full-time) paying just over £6,000 a year, or £1,900 a year working part-time.

The TUC is calling for:

  • Subsidised, affordable childcare from as soon as maternity leave finishes.

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

  • A greater role for employers in funding childcare. Either through direct subsidy to employees or the provision of on-site childcare facilities.
  • Increase the childcare support provided by tax credits and Universal Credit. Including by reversing cuts to the UC work allowance, scrapping the unfair ‘two child’ policy lifting the cap on benefit uprating.

The analysis was carried out for the TUC by Landman Economics. Childcare cost data were provided by Coram Family and Childcare.

TUC General Secretary Frances O’Grady said, ‘Working parents have seen childcare fees rocket, as their wages have stagnated. Despite government support families still face eye-watering nursery bills.

‘Britain’s cost of living crisis is having a huge impact on working mums and dads.’

Ellen Broomé, chief executive of Coram Family and Childcare, said, ‘Successive governments have rightfully invested in childcare but, while this investment has been welcomed, many parents remain frozen out of work because of high childcare costs.

‘We know that high quality childcare boosts children’s outcomes, benefits the economy and allows parents to make genuine choices about work and care. But in the last year alone, childcare costs have risen by 7 per cent. Urgent action is needed to make sure all parents are better off working after paying for childcare.’

Jonathan Broadbery, head of policy and external relations at the National Day Nurseries Association (NDNA) said, ‘This research will be a real cause of worry for parents and nurseries. For years we have been warning about the pressures caused by the Government’s funded childcare policy, with not enough money being made available to pay for the hours promised.

‘Our own research has found that almost 90 per cent of nurseries aren’t covering their costs with the hourly rate paid by government. With wages, rates and inflation rising each year, the gap between stagnating funding and childcare delivery costs keeps increasing leading to an average shortfall of £1.90 an hour for every child. Parents and nurseries end up paying the shortfall which results in higher fees for paid-for hours, particularly for younger children.

‘The TUC is calling for free childcare to kick in from maternity leave which would be a great help for new parents. However, the Government needs to address the concerns of providers with the current system and any new schemes would need to be thoroughly costed to ensure sustainability.’

Children and families minister Nadhim Zahawi said, ‘We are spending more than any other Government on childcare support – around £6 billion a year by 2020. As part of this we have doubled our free childcare offer for working parents to 30 hours a week, saving them up to £5,000 a year per child. This offer is being successfully delivered all over the country, with more than 340,000 children benefiting from the offer in the first year, helping parents to balance their work and family life.’

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