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Is the cost of childcare rising

childcare costs

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The cost of childcare has long been a contentious issue and for working parents it seems to be getting more expensive. Recent reports have highlighted above inflation increases at a time when wages and working family benefits have risen below inflation.

The cost of a child

The Child Poverty Action Group’s report ‘The Cost of a Child in 2013’ looked at the overall cost of bringing up a child to the age of 18. The amount necessary for a minimum standard of living is now £148,000, which includes childcare and housing costs. This figure was up by 4% from 2012 and childcare costs increased by 5.9%. At the same time family incomes have barely increased: the minimum wage was up 1.8%, average earnings by 1.5%, family benefits by 1% and there was no change in child benefit.

Childcare Costs

The Daycare Trust’s ‘Childcare Costs Survey 2013’ also showed increases that far outstripped inflation. Combined with almost stagnant income levels, this means that parents are now spending a far higher percentage of their wages on childcare.

Childcare for the under twos saw some of the biggest increases over the year. childcare costsThe average cost of a place at nursery for an under 2 is now £4.26 per hour. This would amount to an annual cost of £11,000 for 50 hours a week of childcare. For parents in London the costs are 25% higher, with an average of £5.33 per hour or £14,000 a year for 50 hours a week. Childminders are only slightly cheaper, with an under 2 costing on average £3.93 per hour. The Daycare Trust’s report shows that since last year childcare for this age group has risen by 5.2%. Since 2003, childcare costs for those under 2 have increased by 77%, when real wages are not much higher than they were.

Many parents of young children often think that life will get easier and cheaper once their children reach school, but the cost of after school childcare has also increased substantially: up by 5% since last year. The average cost of after school care with a childminder is now £72.78 per week. For those lucky enough to have after school facilities within school this will set them back an average of £49.67 per week. This might not seem much, but for a family with 2 children, 15 hours of childcare a week in term time will cost £4,000 a year. This could be the reason why 26% of families use grandparents to help with childcare during term time.

What help’s available for childcare costs?

With these costs continuing to rise, any help that you’re entitled to can be well worth it. For families who claim Working Tax Credits, the Childcare element can subsidise up to 70% of the costs of registered childcare, to a maximum of £175 per week for one child and £300 per week for 2 or more. Changes that will come into force as part of Universal Credit will see this help extended to those who work less than 16 hours a week.

Some employers provide a childcare voucher scheme as part of their benefits package. This money is deducted before tax and National Insurance, reducing your tax liabilities. For basic rate taxpayers, you can have a maximum of £55 per week in vouchers.

Due to the amount of regulations in the industry, it’s unlikely that childcare costs will reduce dramatically. Therefore, they’ll continue to be a heavy burden for working families at a time when incomes are already stretched.



About Catherine Stern

About Catherine Stern

Catherine Stern is a freelance writer with a background in marketing and PR. She currently writes web content on a range of subjects, from finance and business to travel and home improvements. As a working single mum of two young boys she understands the pressures that today’s working parents face and the topics they want to read about.

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