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Childcare costs survey 2012

Annual Childcare costs survey 2012 sponsored by Computershare Voucher Services Ltd.

Spiralling nursery costs add to parents’ financial woes

  • New survey shows nursery costs rising by nearly 6%
  • 44,000 fewer families getting help with childcare costs since April tax credit cut
  • Major gaps in childcare despite legal duties on local authorities
  • Childcare costs survey 2012 sponsored by Computershare Voucher Services Ltd

New figures compiled by Daycare Trust show above-inflation increases in the price of nursery care in Britain with the hourly rate for a child aged under-two up 5.8%. The increase for a child aged two and over is 3.9%. In the same period wages have remained stagnant, only increasing by 0.3%.  

At the same time new HMRC figures reveal the impact of the Government’s cut to financial support for childcare costs in April 2011. By cutting the maximum level of support available through the childcare element of Working Tax Credit from 80% of costs to 70%, the average claim has fallen by over £10 per week, costing the low-income working families that receive it more than £500 per year.  Furthermore, 44,000 fewer families are receiving this help with childcare costs. 

Daycare Trust’s survey reveals: 

  • Average childcare costs now exceed £100 for a part-time place (25 hours) in many parts of Britain with the average yearly expenditure for a child under two standing at £5,103. The most expensive nursery recorded by this year’s survey costs £300 for 25 hours care – that’s £15,000 for a year’s childcare.
  • Childminder costs have risen by a smaller amount with a rise of 3.2% for a child under two, and 3.9% for a child aged two and over.  
  • Significant gaps in childcare availability across Britain with a worrying lack of childcare for disabled children and parents who work outside normal office hours.  Over half of local authorities said that parents had reported a lack of childcare in the previous twelve months.

Commenting on the findings, Anand Shukla, Chief Executive of Daycare Trust said:  

“These above-inflation increases in the cost of childcare are more bad news for families, heaping further pressure on their stretched budgets as wages remain stagnant and less help is available through tax credits.

“Daycare Trust warned that the Government’s decision to cut tax credits would mean that some families found that they were no longer better off going to work once they had paid for childcare. The latest HMRC figures reinforce Daycare Trust’s fear that the loss of this vital lifeline is forcing families out of work and in to poverty.

“Today we are calling on the Government to reverse its self-defeating childcare tax credit cut, and to deal decisively with the childcare affordability crisis for parents by pledging to provide free childcare for all two year-olds by the end of the current parliament.

“At a time when family and government finances are so stretched, and the Treasury is looking to maximise tax revenues and reduce benefit expenditure, it is sheer folly that any parent has to leave work because they cannot afford to pay for childcare.”

Julian Foster, Managing Director of Computershare Voucher Services, added

“Daycare Trust’s survey highlights the ever growing gap between working parents and affordable childcare.

“Employers can do their bit to support employees by making flexible working a reality and introducing childcare voucher schemes. Schemes are cost neutral for companies to run and allow a basic rate earner to save nearly £1000 per year on their childcare costs.

“Computershare Voucher Services fully supports Daycare Trust’s recommendations for improving accessibility to affordable childcare. We have been particularly heavily involved in the plan to extend childcare vouchers to self-employed and encourage entrepreneurship; a proposal that has already seen some Government support.”

Key Policy Recommendations:

Daycare Trust calls on the Government to:

  • Increase the proportion of costs which can be claimed under the childcare element of Working Tax Credit (and Universal Credit) to 80 per cent, with a higher rate of 100 per cent for families on the lowest incomes and those with disabled children.
  • Extend provision of the free early education entitlement to all two, three and four year olds by 2015 and increase the number of hours available per week to 20 by 2020.  
  • Promote the business case for employers helping parents with their childcare needs. This should include encouraging employers to offer flexible working arrangements, providing childcare information to parents and offering childcare vouchers to employees. 
  • Extend childcare vouchers to the self-employed.

We also call on local authorities to: 

  • Recognise the important strategic role that childcare plays in allowing parents to take up and remain in work, therefore reducing child poverty, by prioritising childcare in their strategic planning. 
  • Produce a Childcare Sufficiency Assessment each year analysing the demand and supply of childcare. Local authorities should report each year on progress towards filling gaps in availability to demonstrate they are meeting their obligations under the Childcare Act 2006 to ensure sufficient childcare places for all working families.  
  • Reconsider cuts to Family Information Services and evaluate their strategic importance in providing parents with the information needed to access childcare services and financial support. In particular they have a key role in supporting parents to access free early education places, including outreach to parents who may be eligible for new two year-old places.

 

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