Spiralling childcare costs mean that for many families “it simply does not pay to work”, a major report has warned.
It suggests that despite heavy Government spending, childcare prices have continued to soar in recent years.
The cost of sending a toddler to nursery part-time has risen by around a third over the last five years, with parents now forced to fork out £6,000 a year on average.
In general, prices have continued to increase at levels above the rate of inflation, the report reveals.
The findings are contained in the Family and Childcare Trust’s latest annual survey of childcare costs, which is based on information gathered from local council 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.
The survey found that across Britain, it now costs around £115.45 on average to send a child aged under two to nursery for 25 hours a week – a total of £6,003 per year. This is the first time that these costs have broken through this barrier, the trust said.
It is a 5.1% increase on last year, the survey found.
When population distribution is taken into account, the price of a part-time nursery place for under-twos has risen by 32.8% over the last Parliament.
The cost of part-time care by a childminder for a toddler is also up by 4.3% on last year, an average of £104.06 per week, or £5,411 a year.
“Over the last five years, while there have been deep cuts to other public services, the coalition Government has increased spending on childcare,” the report said.
“But despite this welcome investment, this year’s survey finds childcare prices have continued to increase and the gaps in provision remain unfilled.
“The reality is that for too many families it simply does not pay to work.”
The survey also shows that across Britain part-time nursery prices for a child aged two and over have risen by 4.1% to £109.83 per week on average, while a childminder for this age group is up 2.5% to £103.04.
In England alone, nursery costs for an under two-year-old have risen by 5.7% to £117.30 – more than in Scotland or Wales.
Nursery care for a child aged two and over in England has increased by 5.2% in a year to £111.64, again more than in Scotland or Wales.
Childminder costs for all age groups have also risen in England, although the price of after-school clubs for 15 hours a week has fallen by 1%.
The report suggests that there are two reasons for the hikes in prices for under-twos in England. Firstly, nurseries and childminders putting up their prices after keeping them down during the recession, and secondly, parents paying more per hour to subsidise the Government’s free places for disadvantaged two-year-olds.
A regional breakdown shows that parents in the East Midlands have seen the steepest rises in nursery care for under-twos – up 26% in a year to £118,82 on average.
Over the last five years, the West Midlands have seen the biggest hike in nursery costs for this age group, rising by 51.9%.
It goes on to say that for the first time outside of London, some parents on the lowest incomes may find that the maximum amount of help they can claim for childcare under working tax credits will not cover part-time childcare costs, and could leave them out of pocket by at least £52.50 a week.
Trust chief executive Stephen Dunmore said that they have welcomed extra childcare support for parents.
But he added: “If childcare costs continue to rise at this pace, the benefits of this new financial support to parents will be quickly eroded within the next parliament.
“In spite of several positive initiatives, including more funding for free early education, the childcare system in Britain needs radical reform. In the run-up to the general election this May we want to see all political parties commit to an independent review of childcare.”
A Department for Education spokesman said: “We understand that the cost of childcare can be an issue for many parents, but this report only relates to the prices parents pay after they receive the Government’s offer of 15 hours of free childcare.
“It therefore neglects the record amount of fully funded childcare we are giving – savings worth a maximum of almost £9,000 per child. Based on the FCT’s own figures, our free entitlement will save the average eligible family £2,500 per year for each child. Tax-free childcare will also give 1.9 million families an extra £2,000 per year.
“We are pleased the report acknowledges the significant steps we have already taken to increase funding in the early years and in particular that over the course of this parliament we have increased funding from £2 billion to £3 billion a year.”
Labour said its own research, based on Freedom of Information requests, had found that childcare costs have risen by more than a third in over a quarter of local authorities since 2010.
Shadow childcare minister Alison McGovern said: “Since 2010 the failing Tory plan has seen the costs of childcare soar. On top of this, there are over 40,000 fewer childcare places and wages are down £1,600 a year on average.”
Neil Leitch, chief executive of the Pre-school Learning Alliance, said it was unsurprising that costs are still rising.
“For many years now, government funding for the free entitlement schemes for two-, three- and four-year-olds has failed to meet the cost of the providing these places, leaving childcare providers to make up the shortfall,” he said.
“As a result, many providers have been forced to increase the cost of paid-for hours just to stay afloat.
“The Alliance has long warned that a failure to address this shortfall would lead to cost rises, but the Department for Education has consistently chosen to ignore this problem. Clearly, this cannot continue.”
He called for a review of the free entitlement funding system.
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Childcare costs 'hit value of work'
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