Government makes moves to tackle childcare costs

Good news for parents - more help could soon be on the way for families to help them manage the spiralling cost of childcare.

Prime Minister David Cameron has recently announced that he intends to set up a new commission that will focus on childcare and work with parents and providers to try and find ways to make childcare more affordable.

As well as looking at ways to reduce the cost of childcare, the commission will look for inspiration from international childcare models and also consider ways to increase places and “wrap-around care” for children over-five, during holidays and out-of-school hours.

The Daycare Trust has revealed in its annual ‘Childcare costs survey 2012’ that working parents are now paying, on average, £15,000 per year for childcare - more than a third of their income - and with little financial help.

According to the Trust, the high cost of childcare is forcing many parents to consider sacrificing work in order to care for their children, whilst living off national benefits.

Here at CVS we think the introduction of the commission is a very positive step by the Government. There is an obvious need to balance the need for quality childcare with affordability and it will be interesting to see what conclusions the commission arrives at.

Times are very tough for many UK families, especially in the current climate and it’s great that the Government is starting to address some of these issues.

We have long been campaigning for addition support to be made available for working parents, such as by increasing the tax-free limits on childcare vouchers in line with increasing childcare costs or by making the vouchers scheme available to the self-employed, so they too can benefit from the savings.

We hope that these measures may now be seriously considered, as they could make a huge difference for so many parents.

If you’re a parent or childcare provider and would like more information about childcare vouchers, then you can find more details on our website or on our interactive Facebook page

Daycare Trust research shows 6% increase in nursery costs

Daycare Trust’s Childcare Costs Survey 2012 was released today. The research, sponsored by Computershare Voucher Services, shows that:

  • hourly childcare costs for a child under two have increased by 5.8%; and 

  • costs for a child aged two and over have risen by 3.9%.

In the same year period, wages have only increased by 0.3%.

Daycare Trust’s research coincides with new HMRC figures which reveal that 44,000 fewer families are receiving help with childcare costs as a result of the Government’s cut to financial support in April 2011. This saw the childcare element of Working Tax Credit cut from 80% of costs to 70% - as a result, the average claim has fallen by more than £10 per week, costing low-income working families who receive it more than £500 per year.  

The survey, conducted between November 2011 and January 2012, asked all Family Information Services in Britain about the cost and availability of childcare in their area. Other key stats revealed that:

  • the average hourly childcare costs now exceed £100 for 25 hours in many parts of Britain

  • the average yearly cost for a child under two is £5,103.

  • Britain’s most expensive nursery recorded this year charged £300 for 25 hours care – £15,000 for the year.

  • Over half of local authorities said that parents had reported a lack of childcare in the last year.

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.

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.

There have been several articles covering the report which you can read here:

Childcare cost rises 'may make parents quit their jobs' – BBC News

Childcare costs rise by nearly 6% - The Guardian

Childcare costs survey: nursery fees rise by 6 per cent in a year – Nursery World

Daycare Trust’s Holiday Childcare Costs Survey 2011 – by Anand Shukla, acting Chief Executive

As part of National Childcare Week, today at Daycare Trust we have released our tenth annual Holiday Childcare Costs Survey, sponsored by Computershare Voucher Services.

With the summer holidays looming, the survey results are a worrying read for parents and those in the childcare sector. The survey shows that play services and holiday play schemes are falling victim to local government spending cuts with 62% of local authorities in England cutting their budgets for childcare and play services since last year. The impact of these cuts are directly affecting parents as 52% of local authorities in England said that parents had reported a shortage of holiday childcare in the last 12 months. Without childcare during the summer period many parents may feel they have no option but to leave their job, or take unpaid leave to look after their children, which they can ill afford in a period where we are all currently feeling the pinch on our household incomes.

The survey revealed however that accessing childcare was not the only barrier for parents, but paying for it too. In the last year costs have increased by 3% in England with huge variation across the country. In the North East of England costs have increased by almost 20% in the last year. This rise puts a huge strain on families’ summer finances, resulting in some parents sitting down and doing the maths and realising the cost is so high that financially they lose, rather than gain by working longer hours.

At Daycare Trust we are campaigning at a local and national level to protect and extend holiday childcare provision. We urge the government to ensure that local authorities meet their obligations under the Childcare Act 2006 and guarantee that there is sufficient childcare for all working parents. Local authorities must protect holiday playschemes and subsidies for lower income families. The danger is that cuts don’t simply lead to bored children at home, but that they will lead to increased levels of child poverty and put parents’ jobs at risk.

These opinions are those of the writer and not necessarily those of Computershare Voucher Services.