Wages not keeping pace with 'spiralling' cost of childcare

The cost of childcare for young children has increased up to seven times faster than wages
The cost of childcare for young children has increased up to seven times faster than wages

The cost of childcare for young children has increased up to seven times faster than wages over the past few years, a new study reveals.

Analysis by the TUC showed that in England the average pay of parents with a one-year-old child rose by 12% in cash terms between 2008 and 2016, while childcare costs shot up by 48%.

In London childcare costs have risen 7.4 times more quickly than pay, in the East Midlands seven times, and in West Midlands 4.8 times, the report said.

While there is government support for childcare for children aged two and older, most working parents with one-year-olds do not get any state help, the union organisation said.

Parents are spending an increasing amount of their pay on childcare, the TUC added.

Single parents working full-time with a one-year-old in nursery for 21 hours a week spent more than a fifth of their wages on childcare last year, up from around a sixth in 2008.

Two parents working full-time have seen spending on childcare jump from 8% in 2008 to 11% last year, the study showed.

TUC general secretary Frances O'Grady said: "The cost of childcare is spiralling but wages aren't keeping pace.

"Parents are spending more and more of their salaries on childcare, and the picture is even worse for single parents.

"Nearly a million working parents with one-year-old kids have eye-watering childcare bills.

"There is a real gap in childcare support for one-year-olds until government assistance kicks in at age two.

"Parents need subsidised, affordable childcare from as soon as maternity leave finishes to enable them to continue working, and so mums don't continue to have to make that choice between having a family and a career."

Ellen Broome, chief executive of the Family and Childcare Trust, said that for many parents the cost of childcare meant "it does not pay to work".

She added: "Low-income families claiming Universal Credit typically take home just £1.96 per hour after childcare costs have been paid, and some get even less than this.

"We must make sure every parent is better off working after childcare costs."

The National Day Nurseries Association (NDNA) said its research showed that 83% of nurseries were putting up their fees this year by an average of 4.5%.

NDNA chief executive Purnima Tanuku said: "The average hourly rate paid to nurseries for delivering 30 hours funded childcare is £4.37 and many local authorities pay even less than £4 per hour.

"At these pocket money prices, nurseries are left with a shortfall which can only be passed on to parents in the form of higher fees for paid-for hours."

Tracy Brabin, shadow early years minister, said: "These findings are yet more evidence that this Government is failing working families, and are not able to provide them with the affordable childcare that they so badly need.

"Childcare that's prohibitively expensive can prevent parents, particularly mums, getting back into work or continuing their careers because the take-home pay isn't enough after the care is paid for.

"With the cost of childcare continuing to skyrocket while real wages fall, families are finding it harder and harder to make ends meet.

"Meanwhile, the Government's flagship childcare policy does nothing for families in insecure work or on low incomes who most need this support."

Children and Families Minister Robert Goodwill said: "As well as providing tax-free childcare to around two million households to help pay for childcare costs, we have doubled the free childcare available to working parents of three and four-year-olds to 30 hours a week, saving them thousands a year and helping them get back into work.

"Indeed, an independent evaluation of the early delivery of 30 hours free childcare found that 84% of parents reported improved family finances as a result of the free childcare."