Majority of struggling parents 'put off work' due to childcare costs

By Joe Lepper

| 29 November 2018

The majority of parents on a low income are being put off work due to childcare costs, leaving children missing out on quality early years education that can boost their prospects, a study has found.

Childcare costs can put off low-income parents from seeking work, a study has found. Picture: NDNA

The Centre for Social Justice and Save the Children study found that 57 per cent of low-income parents said they would be put off working or working additional hours because of the associated costs of childcare.

The study points to previous research findings that show early years education is associated with better outcomes and calls for government to provide more childcare support to low-income parents through the new Universal Credit system. Currently 85 per cent of childcare costs are covered - but the study calls for this to be increased to 100 per cent.

"Our modelling suggests this would have a substantial impact on take-home pay for low-income families, and therefore help to mitigate the high marginal costs they face by returning to work or increasing hours," the study states.

"And the offer of 100 per cent free childcare is also an accessible message that can be easily communicated, which is likely to improve uptake."

This boost for low-income families can be paid for by reducing subsidies that more affluent parents receive, the study adds.

The report calls for an overhaul of the eligibility criteria for the 30 hours of childcare offer for working parents of three- and four-year-olds. Currently a couple earning £200,000 between them are able to access this offer, as long as neither are individually earning more than £100,000.

"We do not believe that public money should be distributed to the highest earners while other parents struggle to get on in life," states the study.

"The current funding spread for childcare now tilts towards better-off families and funds should be placed where they are most transformative."

In July members of the education select committee also raised concerns that too many affluent families are benefitting from childcare support when it could be redirected to those most in need. However, children's minister Nadhim Zahawi labeled their concerns as "faux outrage" during a committee hearing.

The report also raises concerns that parents are being forced into debt by having to meet childcare costs upfront and then claim back support.

Government should consider revamping this system, the study recommends, so that parents can submit a bill for childcare costs direct to the Department of Work and Pensions, who can then pay providers.

However, the study concedes that some providers may still want payments to be made upfront. 

National Day Nurseries Association chief executive Purnima Tanuku, said: "The issue of Universal Credit is a vital one that could cause serious cash flow problems for parents and nurseries. We have put this case to MPs who are investigating the roll-out of this policy.

"This report shows the barriers facing parents in trying to access high-quality childcare but also the clear need to simplify the system.  

"NDNA believes that a childcare passport, where all childcare funding support follows the child to the parent's provider of choice, is the best and most efficient way to deliver the government's childcare offer."


The study's call for low-income families to receive more support to meet childcare costs has been backed by Coram Family and Childcare head Megan Jarvie.

"Our own analysis found that higher income families gained six times more from new childcare investment than low-income families, and that parents in low-income families risk paying to take on an extra day's work as childcare costs outstrip their income," she said. 

"More generous support for childcare through Universal Credit would reach the families that need it most and should be a priority."

The Department for Education has been contacted for comment.

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