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Childcare costs rise four times faster than wages

The latest findings from the Trades Union Congress (TUS) published today reveals that the cost of childcare has grown four times faster than wages since 2008.

Key findings include:

  • Between 2008 and 2016, the average cost of placing a child under the age of two in nursery grew by 49%
  • In England the average wages of those with a one-year-old child rose by 12% in cash terms – between 2008 and 2016.
  • In London childcare has risen 7.4 times more quickly than pay. Similarly, in the East Midlands 7 times, and in West Midlands 4.8 times.

In England:

  • 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 in 2016, up from around a 6th (17%) in 2008.
  • One parent working full-time and one parent working part-time with a one-year-old in nursery for 21 hours a week spent a 7th (14%) of their salary on childcare in 2016, up from around a 10th (11%) in 2008.
  • Two parents working full-time with a one-year-old in nursery for 21 hours a week spent around a 10th (11%) of their wages on childcare in 2016, up from around a 13th (8%) in 2008.

TUC would like to see:

  • Universal free childcare from the end of maternity leave. This would help single parents and families – especially younger mums and dads with less seniority and lower pay – to stay in work and progress their careers after having children. 
  • More government funding for local authorities to provide nurseries and child care.
  • A greater role for employers in funding childcare. Either through direct subsidy to employees or the provision of on-site childcare facilities.

Susanna Kalitowski, Policy and Research Manager at PACEY (Professional Association for Childcare and Early Years) comments:

“Sadly it comes as no surprise to PACEY that childcare costs are rising, and are outpacing the increase in wages. Childcare providers have been just as affected as everyone else by inflation and the increase in the cost of living. Larger providers have also been hit by an increase in business rates, rises to the minimum wage and new pension requirements.

“On top of this, the ‘free’ childcare entitlements for 3- and 4-year-olds have been seriously underfunded in many areas for years, leaving a gaping hole in providers’ budgets. The problem is now set to get worse with the doubling of the entitlement to 30 hours for working parents. Recent PACEY research found that it is underfunded by an average of £400 per year for every place. In places like London and the South East, the shortfall is much larger.

“Childcare providers are acutely aware of how much parents struggle with childcare costs, and raising fees is usually a last resort. They have now been forced into the unenviable position of raising the cost of caring for babies and toddlers or charging parents of 3- and 4-year-olds for meals and trips. Either way it is hard to see how childcare costs will go down.

“What we desperately need is a recognition from government of the true cost of providing childcare, and a long-term sustainable funding settlement for providers that offers families the affordable, high quality childcare they need.”