Sharp rise in childcare costs for families

Analysis of childcare costs by Coram Family and Childcare group finds that the average cost of a nursery place for 25 hours per week for a child under the age of two is £6,800 a year (£131.61 a week).

This is an increase of five per cent on last year’s figure and more than double the current consumer price inflation of 1.8 per cent.

This year’s figure is also more than twice as much as the average household is spending on food and non-alcoholic drinks each week, which stands at £60.60 according to the Office of National Statistics.

Meanwhile, the average annual bill families face for each child with a childminder for 25 hours a week is £6,200 (£118.34 a week).

Part-time childcare costs for children aged two and older are also around double the average cost of a family's weekly grocery shop. The average nursery cost for each child in this age bracket for 25 hours a week is £126.74, and £117.23 with a childminder.  

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Coram’s analysis also found widespread regional variation in nursery costs, with parents in London and the South East paying substantially more than those living elsewhere in England.

In terms of weekly costs for nursery childcare for under two-year-olds, the most expensive regions in England are:

• Inner London £182.56
• Outer London £156.02
• South East £144.90
• East of England £141.95

Meanwhile, the least expensive regions are the West Midlands and Yorkshire and Humber, where 25 hours a week nursery childcare costs, for a child under the age of two, average £116.25 and £113.76 respectively.

In its Coram Family and Childcare’s 20^th annual childcare survey, the group calls on the government to ensure that families are not missing out on their childcare entitlements that are paid under Universal Credit.

It also wants the current entitlement of 30-hours free childcare to working parents of three-and four-year-olds to be extended to include parents in training.

The early years pupil premium should be doubled to help the most disadvantaged children and any underspend on tax-free childcare should be redistributed within the childcare system to help the most vulnerable children, the report states.

“Good childcare is essential: it enables parents to work and boosts children’s learning,” said Coram Family and Childcare head Claire Harding.

“But for far too many families in the UK, it just isn’t working. Recent government investment is welcome, but many families still face crippling costs, especially in the period from the end of parental leave to when a child turns three."

She added: “We’re calling on government to reform and simplify the childcare system so every parent is better off working after paying for childcare, and every child has access to childcare which supports their learning and development.”

Early years leaders say that the report’s findings show the need to invest more in the sector, as providers are increasingly forced to pass on the cost of underfunding to parents.

Early Years Alliance chief executive Neil Leitch said: "The sector has long warned that the growing childcare funding shortfall was likely to lead to increased costs for parents - and especially those with younger children who aren't eligible for government schemes - as struggling early years providers are forced to increase fees in order to plug an ever-widening funding gap."

"Every year, the cost of delivering childcare places gets more and more expensive, and yet government funding has consistently failed to keep up.

“In April, nurseries, pre-schools and childminders across England will see their staffing costs increase hugely as a result of national living and minimum wages rises of more than six per cent - but the biggest increase in funding any provider is likely to see is two per cent, and that's on the back of years of stagnant funding.

"Ministers cannot continue to ignore the impact that chronic childcare underfunding is having on both the early years sector and the children and families it promised to support.”

National Day Nurseries Association chief executive Purnima Tanuku added: “Today’s report is no surprise. Every year nurseries have to take difficult decisions when reviewing their fee structures.

“The rising fees for parents reflect the rising costs childcare providers face.”

Liz Bayram, chief executive for the Professional Association for Childcare and Early Years added: “It is no surprise that childcare costs are continuing to increase for families, especially if their child is two or under. Continued underfunding of government’s early education entitlements in England and variations in the rates paid to funded providers in Wales, as well as increasing business costs like minimum wage increases, pension costs – are placing childcare providers between a rock and a hard place. This combined with a growing lack of places, especially for disabled children and for families working atypical hour, is placing increased pressure on childminders, nurseries and pre-schools who are already struggling to remain sustainable.

"Addressing the on-going underfunding of early education places for all three and four year olds as well as eligible two year olds has to be a priority for the new Chancellor in his imminent budget. Alongside this, ensuring additional support for local authorities to improve how they manage their local childcare market to ensure children and families are able to access the high quality childcare they need.”