Annual survey shows rocketing cost of childcare

NOTE: The table shows weekly childcare costs for 25 hours a week and the percentage change since the 2012 Annual Childcare Costs Survey.


The Daycare Trust and the Family and Parenting Institute’s Childcare Costs Survey 2013, compiled from figures submitted by Family Information Services, shows that over a ten year period from 2003-2013, a nursery place for a child aged two or under is now 77 per cent more expensive in real terms, with similar rates of increase for childminders.

The average cost of provision for under-fives is now £4.26 per hour, rising to £5.33 per hour in London.

According to the survey, the cost of a nursery place for a child under two has risen by 4.2 per cent from £102.05 in 2012 to £106.38 per week for a part-time place (25 hours).

Costs for a part-time place for a child over two have increased by 6.6 per cent from £97.51 12 months ago to £103.96 per week, more than double the rate of inflation.

Childminder costs in Britain have also risen from £92.60 in 2012 to £98.15 for a child under two, an increase of 5.9 per cent. While for a child aged two and over the cost of a childminder has increased from £91.87 to £96.67.

The survey also shows the rate in which childcare costs vary depending on region. Childcare continues to be most expensive in London, the South-East and South-West, and cheapest in Wales and the North-West.

The figures in the Annual Childcare Costs Survey provide little support for the economic case for the proposed changes to ratios, as costs have continued to rise above the rates of inflation, regardless of ratios remaining the same. The survey goes on to say that there is little evidence to suggest that childcare providers, many of whom have extremely tight margins, will pass on any savings to parents if they relax their ratios.

While childcare costs have risen, real earnings have fallen, meaning that childcare is now taking an increased proportion of parents’ income. The Office for National Statistics’ Annual Survey of Hours and Earnings data shows that average earnings in late 2012 were at similar levels to those of 2002-03.


Source: Daycare Trust

According to the charity, after-school club costs have also risen, with a place costing an average of £49.67 per week across Britain, a rise of 9 per cent over 12 months.

Anand Shukla, chief executive of Daycare Trust and the Family and Parenting Institute, said, ‘Childcare is as essential as food and heating for working families. Yet while wages stay still and childcare becomes more expensive, it’s increasingly difficult for parents and mothers in particular to make work pay.

‘We know that the Government wants to reduce the cost of childcare to parents. But we are deeply concerned about proposals to relax ratios because this risks compromising quality, safety and children’s development. We urge the government in this year’s Budget to find ways to support parents with the costs of childcare – without compromising quality.’

He added, ‘The funding system for childcare is complex and our average figures may differ from the actual cost to childcare providers of providing high quality care. Yet, the survey makes clear that from a parent’s perspective costs are increasingly difficult to manage which is a finding that should concern us all. Families are being expected to pay more for their child’s nursery place, an average of £14,000 per year in London, than the fees for many private schools and this cannot continue’

Julian Foster, managing director of Computershare Voucher Services, sponsors of the survey, said, ‘The Government recently announced it wants to do more to support working parents with childcare costs. Well, this survey tells us that this help can’t come quickly enough and needs to be broad enough to help all parents and not just those with nursery-age children.
 
‘I would ask the Government to take the opportunity at the forthcoming Budget to increase the limits for childcare vouchers, to extend the scheme to the self-employed and those on the National Minimum Wage, and to give all employees the right to request as scheme from their employer.’

Research carried out at the end of last year by the Childcare Voucher Providers Association, whose members include Computershare, Busy Bees Benefits and Edenred, revealed that over 100,000 working mothers and fathers would have to leave employment if they no longer had access to childcare vouchers. A further 300,000 would have to cut the number of hours they work.