Above inflation rises in the cost of UK nursery places at the same time as wages continue to remain stagnant risk forcing parents to give up their jobs because they can no longer afford to pay for childcare.
This is the key finding of a study conducted by national childcare charity, Daycare Trust, and sponsored by childcare voucher provider, Computershare Voucher Services.
It revealed that the hourly rate for nursery care for an under two year old increased by 5.8% last year or by 3.9% for a child aged two or more. It now costs on average £100 for a part-time, 25-hour nursery place, with annual expenditure for a child under two hitting £5,103.
But wages rose by a mere 0.3% over the same period, while the maximum level of support via the Working Tax credit system was cut from 80% to 70%, a reduction of more than £10 per week or more than £500 per annum for low income working families.
To make matters worse, since last April, 44,000 fewer families have been receiving help with their childcare costs due to coalition government cuts in tax credits.
Anand Shukla, Daycare Trust’s chief executive, warned that the situation meant some families were now “no longer better off going to work once they had paid for childcare”.
“The latest HMRC figures reinforce Daycare Trust’s fear that the loss of this vital lifeline is forcing families out of work and into poverty,” he said. “Today we are calling on the government to reverse its self-defeating childcare tax credit cut, and to deal decisively with the childcare affordability crisis for parents by pledging to provide free childcare for all two year-olds by the end of the current parliament.”
Shukla also proposed that the government extend the provision of free early education entitlement to all two-to-four year olds by 2015 and increase the numbers of hours made available to parents each week to 20 by 2020.
Employers should likewise be encouraged to provide staff with flexible working arrangements and childcare vouchers, which are cost-neutral for organisations to deal with but save a basic tax rate earner nearly £1000 per year on their childcare costs.