Warning Over Childcare Costs

The cost of a nursery place has almost doubled over the last decade as parents struggle with fees which are soaring towards levels being charged by private schools, childcare charities have warned.

A full-time nursery place will set a family back around £11,000 a year and the burden of such fees on working parents is akin to taking on a "second mortgage", a report by the Daycare Trust and the Family and Parenting Institute found.

The typical cost per hour for a nursery place for a child aged under two years old has risen by 77% since 2003 to reach £4.26, while wages have stagnated.

The cost of childcare varies widely across Britain and can reach as high as £42,000 a year for a full-time nursery place, which is around 25% more expensive than the annual cost of boarding at a top public school such as Charterhouse, the report said.

London was found to be particularly expensive, with average nursery fees costing just under £14,000 a year for a full-time place.

The report argued that childcare costs are becoming increasingly difficult for families to manage. In the last year alone, the average nursery cost for a child aged under two has increased at an above-inflation rate of 4.2%, to around £106 a week for a part-time place at 25 hours a week.

Costs for children aged over two have increased at an even faster rate of 6.6% annually to around £104 a week for a part-time place, the report found.

Childcare costs for older children have soared by 9% over the last year, with the typical cost of an after-school club at 15 hours a week reaching around £50.

Anand Shukla, chief executive of Daycare Trust and the Family and Parenting Institute said:

"The survey makes clear that, from a parent's perspective, costs are increasingly difficult to manage which is a finding that should concern us all.

"Families are being expected to pay more for their child's nursery place - an average of £14,000 per year in London - than the fees for many private schools - and this cannot continue."

The survey regularly asks local authorities to report the price that parents pay for different forms of childcare in their area.

The report suggested that the rising cost of childcare is evidence of a "market failure in our childcare system", with a lack of new providers setting up to meet levels of demand in some areas.

The report pointed out that 91% of nursery care is delivered by the private and not-for-profit sectors in England. It said that private sector providers often have more costs to overcome than those in the public sector such as rents and servicing debts.

The study said that much of the expense of childcare is driven by staffing costs. At present, regulations stipulate that for children under two in nurseries there must be one member of staff for three children.

The report said:

"While salaries for nursery workers are not high, the need to maintain safe supervision levels and high quality childcare does, inevitably, mean that childcare cannot - and should not - be provided 'on the cheap'."

One of the ways in which the Government helps parents with childcare costs is a voucher scheme which is available through employers and allows mothers and fathers to pay for childcare out of their pre-tax wages. Basic rate tax payers can pay for up to £243 of childcare a month with the vouchers.

Julian Foster, managing director of one of the voucher schemes, named Computershare Voucher Services, called for the limits on childcare vouchers to be increased and said the scheme should be extended to help the self-employed.

He said

"(This) would show to this country's working families that Government 'gets it'. They get that support needs to be widely accessible, they get that household budgets are becoming increasingly strained, and they get that working mothers and fathers - part of the lifeblood of the British economy - need adequate support to raise their families and this country's future."

Sharon Hodgson, Labour's shadow children's minister, said:

"David Cameron has created a childcare crisis. On his watch, we've seen costs spiral, support for families cut back and over 400 children's centres close."

A Government spokesman said that the childcare system is undergoing reforms to allow more providers to enter the market.

He said:

"High quality providers will be able to expand and more childminders will enter the market - this will mean parents have more affordable childcare.

"Ofsted will be the only arbiter of quality, removing any council duplication. As a result more taxpayers' money will go to the frontline.

"We want to help working families with costs and accessibility, and will make an announcement soon."

Here is the average weekly cost of a part-time (25 hours a week) nursery placement for a child aged under two years old by region according to the report:

:: East of England, £106

:: East Midlands, £104

:: London, £133

:: North East, £101

:: North West, £92

:: South East, £125

:: South West, £113

:: West Midlands, £96

:: Yorkshire and Humberside, £102

:: England average, £108

:: Scotland average, £101

:: Wales average, £92

:: Average across Britain, £106

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