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Rapid rise in childcare costs adds to family finance woes

9 February 2011

The tenth annual childcare costs survey from Daycare Trust, the national childcare campaign, shows that the costs of childcare continue to rise.

Today's survey, which is compiled from figures submitted by Family Information Services in England, Scotland and Wales, examines by region the cost of childminders, nurseries and after-school club provision, along with the availability of childcare. This year's survey found significant rises in childcare costs for all forms of childcare. Key findings in 2011 include:

• In England, the cost of a nursery place for a child of two or over has increased by 4.8% since last year - far exceeding the growth rate of 2.1 per cent for the average wage in the same period.
• The average yearly expenditure for 25 hours nursery care per week for a child under two stands at £5,028 for parents in England, £5,178 for parents in Scotland and £4,723 in Wales. The average yearly cost of 25 hours care from a childminder for a child under two stands at £4,670 in England, £4,664 in Scotland and £4,687 in Wales.
• Costs varied considerably between regions and within regions. London and the South East of England remain the most expensive in Britain for all forms of childcare. In London, the average cost for 25 hours nursery care for a child under two is £118.54 (equating to £6,164 per year).  In contrast, the same provision in the North West is £82.70 a week (£4,300 per year).
• The most expensive nursery reported in this year's survey was located in the West Midlands, costing £11 per hour. Parents using this nursery for 25 hours per week could therefore conceivably pay £14,300 per year (or £28,600 for 50 hours care).
• Despite a legal duty on local authorities to ensure that sufficient childcare is available locally, 60 per cent of Family Information Services stated that parents had reported a lack of available childcare in their area during the last twelve months.
• The findings also suggest a particular lack of childcare for children aged 12 and over and those with a disability or special educational needs, with only 14% and 11% of FIS saying there was adequate childcare available for these groups respectively.

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

"When parents sit down to calculate their family finances and see childcare costs increasing far faster than their wages, it is no wonder they may think twice about the economic sense of staying in work. These high, rapidly rising costs are particularly significant given the number of people not receiving cost of living pay increases this year, the increase in  VAT , and rising costs of other household goods, particularly food and fuel.

These findings add to our concern about the reduction in the childcare element of Working Tax Credit, which from April will only cover up 70% of childcare costs for low income working families, rather than the current 80%. Once this change comes into place, some families will effectively have an extra £546 a year added to their childcare bill. Yet parents in the UK already spend an average of one third of their net income on childcare costs - more than in any other OECD country. 

The evidence for investing in the early years is extremely strong, and as outlined by both Graham Allen and Frank Field's recent reviews is essential to both child development and fighting poverty. It is therefore crucial that childcare is as affordable as possible.

We are also very concerned to see that many local authorities appear to be failing in their duty to provide adequate childcare. It is startling that only 11% have sufficient childcare in place for disabled children.

With costs on the rise again, it is more important than ever that parents are aware of, and take up the help with childcare costs that they are entitled to. All three and four year olds are eligible for the free early years entitlement, which was increased to 15 hours last September. There is also help available through tax credits and employer-supported childcare vouchers, which many parents are entitled to. For more information, visit www.daycaretrust.org.uk."

Daycare Trust policy recommendations:

• Local authorities should prioritise early years and childcare services when finalising their budget decisions for 2011/12 in the coming weeks. In particular they should ensure that the entire Sure Start budget is spent on its intended purpose, and should also use other parts of the Early Intervention Grant to support families with the cost of childcare.
• Local authorities should complete their Childcare Sufficiency Assessments thoroughly, using the information gathered to fill gaps in provision in their area. The focus will vary locally, but they should prioritise school age and disabled children.
• Government should reverse the decision to reduce the proportion of childcare costs covered by the childcare element of Working Tax Credit from 80 to 70 per cent in April 2011.
• Government should ensure that the new Universal Credit provide a level of assistance for families for childcare costs that ensures that they are better off by moving into work or by working extra hours, and that is simpler to understand than the current tax credit system.
• Government should increase the level of subsidy available to childcare providers to incentivise and support them to raise quality levels (largely though improving staff qualifications and pay) without passing on cost increases to parents.

ENDS.

NOTES TO EDITORS

Methodology

Daycare Trust sent a survey to all Family Information Services in England and Wales, and Childcare Information Services in Scotland, in November 2010. The overall response rate was 58 per cent. All regional response rates were 56 per cent or above, with the exception of the East of England and the South East at 45 per cent and 41 per cent respectively.  

Daycare Trust would like to thank Family Information Services and Childcare Information Services for completing the survey.

ABOUT DAYCARE TRUST

Daycare Trust is the national childcare charity. For 25 years, Daycare Trust has been championing childcare - campaigning for quality affordable accessible childcare for all and raising the voices of children, parents and carers.  We advise parents and carers, providers, employers, trade unions and policymakers on childcare issues.  We recognise that everyone is unique and we value difference in our communities.  We listen to all views and are committed to act without prejudice. 

Daycare Trust runs an Information Line  on 0845 872 6251, open Monday, Tuesday, Thursday and Friday 10.00am-1.00pm and 2.00pm-5.00pm, Wed 2.00pm-5.00pm (only). Parents can also visit www.daycaretrust.org.uk and www.payingforchildcare.org.uk for information.

Daycare Trust is a member of the Campaign to End Child Poverty, www.endchildpoverty.org.uk.

For a copy of the Childcare Costs survey, to arrange an interview or case study, contact Veronica King in Daycare Trust press office on 020 7940 7525 (out of hours 07796 886 648), or vking@daycaretrust.org.uk.

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