Working parents: can they actually afford to work?

Today’s working parents in the UK are caught in a worrying spiral of increasing childcare costs and failing family incomes.

According to a recent article written by Childcare Minister, Liz Truss MP, in the Telegraph, “high childcare costs are putting British mothers off going out to work”. The article points to figures from Eurostat, which produces detailed statistics on the EU and candidate countries, that show just 66% of mothers in the UK are working. This is far less than France (72%), Denmark (86%), the Netherlands (78%) or Germany (69%).

With figures like this, many are now arguing there is a problem with childcare in the UK. New figures compiled by the 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%. And some parents are struggling to keep up the rises, and in the same period wages have remained stagnant, only increasing by 0.3%.


Cuts to childcare support

New HMRC figures have revealed the full 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.

Further research by the Daycare Trust shows 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. And that’s before we start looking at holiday childcare.

According to the Daycare Trust, the average cost of one week of full time (40-50 hours) holiday childcare in Britain is now £99.87, an increase of 3% on last year. And families with two children now face an average bill of around £1,200 for childcare for the duration of the school holidays. In a Government survey, half of parents said they wanted to go to work, but the expense of childcare was one of the key reasons they couldn’t.


Case stories

Stories like those of 35-year-old care worker Helen Ford are now not uncommon. Having gained a degree as a nursery nurse, Helen found her wages were almost entirely wiped out by childcare costs when she had her first child. With pay of around £1,000 per month and childcare costs of £800 a month, she found herself working for around £200, most of which was going on petrol for her commute to work.

Cutting her hours back did little to help the situation and she was forced to work part-time in the evenings at an old people’s home so her husband was able to cover to the childcare.

All this comes at a time when, according the Save the Children, 350,000 children live in poverty and some 20% of mothers and fathers from households with incomes of less than £17,000 a year say their children go without new shoes and 17% cannot afford new clothes. On top of this, about 20% of children in poverty are not able to go on school trips and 14% have to do without a warm coat in winter.

Families are currently facing a triple whammy on childcare: higher costs; fewer places; and less support through tax credits. Deep cuts to local authority budgets have also meant funding to improve childcare quality and availability, particularly in areas of deprivation, has plummeted since 2010. And many parents are now feeling further pressure on the family budget.


The future of childcare

A forthcoming report by the Institute for Public Policy Research (IPPR) paints a bleak picture of a childcare system, with high costs to parents, variable quality and patchy coverage, despite soaring government spending. British parents now face the highest childcare bills in the world after Switzerland.

The IPPR report points out continental systems, in countries such as Germany, France, Denmark and the Netherlands, manage to deliver better value for money. What all of these systems have in common is a focus on quality, with greater flexibility and autonomy given to local providers. They also see a much higher proportion of government money getting to the front line.

“We’re not asking the state to pick up all the cost but we must recognise the amount we are asking parents to pay in this country is more than double what parents pay in other comparable countries,” says Anand Shukla chief executive of the Childcare Trust.

“There are lots of very good reasons why the government should contribute more, from benefiting early years development to more parents in work means more families able to stand on their own two feet without receiving benefits. It is an important sector and offers lots of opportunities and therefore government funding would directly help the economy.”


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