New report shows childcare costs outstrip mortgage

Families are paying more on average for part-time childcare than they spend on their mortgage, according to a new report.

It reveals parents are handing over more than £7,500 a year for childcare for two children, around 4.7% more than the average mortgage bill.

The report, by the Family and Childcare Trust, also suggests that some families may be spending more on childcare than they do on their weekly shopping.

The study is based on information gathered by the Trust from local authority family or children’s information services in England, Wales and Scotland. Each authority was asked to give the cost of 25 hours and 50 hours of childcare as provided by nurseries and childminders. They were also asked to give figures on the average cost of 15 hours childcare in an after-school club, or for a childminder picking youngsters up from school.

It found that a family with one two-year-old child attending nursery part-time (25 hours a week) and a five-year-old in an after-school club will pay out £7,549 a year on average.

This is higher than the UK average annual UK mortgage, which the report says is £7,207 according to official data.

For a family with two youngsters in full-time childcare the average yearly cost is £11,700, the report adds, 62% higher than the average yearly mortgage bill for a family home.

The study says that since 2002, childcare costs have risen more than inflation each year and that international data shows that parents in Britain hand over more than a quarter of their salary (26.6%), more than most other European nations.

In the last five years alone, the price of part-time nursery care for a child under two has risen by 27%, with parents paying around £1,214 more in 2014 than in 2009.

The report concludes: “Our research shows that the current childcare system is not working for anyone.

“Children are losing out on vital early education and families remain trapped in poverty because they cannot make work pay.

“Childcare providers struggle with debts. Women fail to return to the labour market after they have children and the economy loses their skills and their taxes.

“The state faces greater welfare bills and high administrative costs for delivering a complex support system.”

The Trust’s report warns that 25 hours in a nursery for a child aged under two costs an average of £109.89 a week – which it calculates is twice the average price of a weekly food bill (£56.80 a week).

Overall, during the last 12 months, nursery costs for under twos have risen in all areas of Britain, it says, with an average increase of 3.3%.

It adds that the cost of after-school clubs has fallen in England and Scotland, but not in Wales.

Anand Shukla, chief executive at Family and Childcare Trust said: “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.

“We need a childcare system that helps parents who want to work and contribute to the economy and gives children the best start in life. 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.”

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.”

The Department for Education said that the survey shows that the cost of nursery for a child over two was now £106.19, compared to £106.52 per week last year, which it said was a 2% reduction in real terms.

It added that the survey also showed a 12.8% real terms reduction in the cost of a childminder picking up and caring for a youngster after school.

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. Recent 4Children research shows the scale of the struggle parents face with childcare, with one in four saying that affordable, flexible and accessible childcare would make the most real, positive difference to their family life.”

Liz Bayram, chief executive of the Professional Association for Childcare and Early Years (PACEY), said: ” PACEY recognises the difficulties families experience due to the ongoing rise in childcare costs across the UK. However, the rise in costs is not simply a case of childcare settings charging increased fees.

“Indeed, most providers have kept any increase to a minimum whilst 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 recognise the economic benefit of supporting families to balance work and caring responsibilities.”

Shadow childcare minister Lucy Powell 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. Labour’s investment in childcare is good for families and good for the economy.”