Childcare costs in England rise up to seven times faster than wages – The Guardian

The cost of childcare for young children in England has risen up to seven times faster than wages since 2008, analysis shows.

TUC research published on Friday shows that childcare costs for parents with a one-year-old have soared by almost half (48%) over a period when their wages have fallen after adjusting for inflation, albeit rising by 12% in cash terms.

The difference in the rate of increase was greatest in London, where childcare costs rose 7.4 times faster than pay between 2008 and 2016, and the East Midlands, where they rose seven times quicker.

Unlike parents with older children who have not started school, most of the 950,000 working parents with one-year-olds do not get any state help, meaning the costs are eating into their family budgets, the union says.

The TUC general secretary, Frances O’Grady, said: “The cost of childcare is spiralling but wages aren’t keeping pace. Parents are spending more and more of their salaries on childcare, and the picture is even worse for single parents.

“Nearly a million working parents with one-year-old kids have eye-watering childcare bills. There is a real gap in childcare support for one-year-olds until government assistance kicks in at age two.

“Parents need subsidised, affordable childcare from as soon as maternity leave finishes to enable them to continue working, and so mums don’t continue to have to make that choice between having a family and a career.”

The cost of childcare in London

The union found that a single parent working full-time with a one-year-old in nursery for 21 hours a week spent more than a fifth (21%) of their wages on childcare last year. Where one parent was working full-time and the other part-time the figure was 14%, and for two parents working full-time it was 11%.

A single parent working full-time with a one-year-old child in nursery for 40 hours a week spent two-fifths (40%) of their salary on childcare last year. In each case the percentage was up on the equivalent 2008 figure.

The wage figures were drawn from the Labour Force Survey, published by the Office for National Statistics (ONS). Average wages have slumped further in real terms this year, with the latest ONS report, published on Wednesday, showing that, adjusted for inflation, they are at the same level as they were in February 2006.

The TUC has long been urging the government to address the pay squeeze, including by scrapping the public sector pay cap. To coincide with the publication of the figures showing the relative rise in childcare costs, it is demanding that the government also does more to increase affordability of nursery places. It proposes universal free childcare from the end of maternity leave, more funding to enable local authorities to provide care, and a greater role for employers, either through direct subsidy to employees or the provision of on-site creches.

The childcare cost figures, provided by the Family and Childcare Trust (FCT), showed that they rose the most in the West Midlands (67%), followed by the East Midlands (64%) and the north-east (62%). The smallest increase was in the east of England (35%), which saw childcare costs rise 2.9 times faster than wages since 2008.

The FCT chief executive, Ellen Broomé, said childcare was “as vital as the rails and roads to making our country run”. She added: “For too many parents, however, high childcare costs mean that it does not pay to work. Low-income families claiming universal credit typically take home just £1.96 per hour after childcare costs have been paid, and some get even less than this. We must make sure every parent is better off working after childcare costs.”

Purnima Tanuku, chief executive of the National Day Nurseries Association (NDNA), blamed the increase in costs on the government’s policy to extend “free” childcare for three and four-year-olds to 30 hours “without adequate investment”. She said: “Nurseries are left with a shortfall which can only be passed on to parents in the form of higher fees for paid-for hours.”

The children and families minister, Robert Goodwill, said the government was providing tax-free childcare to about 2 million households. “Helping families access affordable childcare is at the heart of this government’s agenda, which is why we are investing a record £6bn every year by 2020 in childcare,” he said.

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