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NEWS: Childcare costs continue to rise

Coram Family and Childcare has published the results of its 20th annual Childcare Survey. The findings are based on surveys from local authorities in England, Scotland and Wales, which were returned to Coram Family and Childcare between November 2019 and January 2020. The key findings from this year’s survey are outlined below.

Childcare Cost

  • Childcare prices for children under three have risen above inflation this year.
  • Working parents of three and four year olds in England and Wales can now get 30 hours of funded childcare a week. If they need 20 extra hours to take this up to 50 hours a week, the average price will be £99 in England, or £86 in Wales. Childminder prices are generally cheaper than nurseries for 50 hours a week.
  • The average price for families using an after school club for five days per week is £60 per week, £1 higher than last years report.

Childcare sufficiency

  • Only around one-half of local authorities in England (56 per cent) have enough childcare for parents working full time.
  • Fewer than one in five local authorities in England have enough childcare available for children aged 12 to 14 who need after school care, or for parents working outside normal office hours, or for disabled children.
  • There has been no improvement in sufficiency in England since 2019. For disabled children and parents working atypical hours, there have been small falls in sufficiency. In Wales, all categories have shown a decrease in childcare sufficiency between 2019 and 2020.

30 hours in England

  • 64 per cent of English local authorities have enough childcare for children using the 30 hour extended entitlement, which is similar to 2019.
  • The majority of local authorities have not seen any impact on the availability of early years childcare, including the entitlements, as a result of the introduction of 30 hours.
  • However, ther are some areas for concern: a third of local authorities thought that 30 hours extended entitlement had caused prices to rise for those aged three to four years outside of the funded entitlements. Half thought there had been a negative impact on the financial sustainability of childcare providers.

Recommendations

The current childcare system makes it hard for families to get the help they need and forces some parents out of the workplace. Government should reform all current spending on childcare to create a simple and efficient system that makes sure all parents are better off working, and all children have access to high quality childcare which helps their development. An ambitious strategy and reform will take time.

In the shorter term, Scottish, Welsh and UK governments should: 

  • Reform Universal Credit so it doesn’t lock parents out of work. This includes increasing the maximum amount of childcare costs paid under Universal Credit and move to upfront payments for childcare.
  • Regularly review the funding rate for early years entitlements to make sure that they meet the cost of delivering high quality childcare.
  • Help parents to improve their skills and employability by extending the 30 hours entitlement for three and four year olds to families where parents are in training.
  • Double the early years pupil premium, to boost outcomes for the most disadvantaged children.
  • Re-allocate any underspend against the budget for Tax-Free Childcare to other parts of the childcare system – and focus this on the most disadvantaged children.
  • Target the £250m/year Flexible Childcare Support fund announced in the Conservative manifesto on the groups most in need and in the areas where there are the greatest shortages.

Liz Bayram, Chief Executive for Professional Association for Childcare and Early Years comments:
“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.”