Families getting into debt due to childcare costs

Families getting into debt due to childcare costs

Families on low-incomes across the UK are having to turn down jobs or are considering leaving work because they can't afford to pay for childcare, according to new research from Save the Children and Daycare Trust.

The survey also found that parents, regardless of income, say that they can't afford not to work, but struggle to pay for childcare. Despite many parents cutting back their spending, almost a quarter have got into debt because of childcare costs. 

According to the Daycare Trust, parents in Britain spend almost a third of their incomes on childcare - more than anywhere else in the world - and such high costs have the greatest consequences for the poorest families. The survey found that, of those families in severe poverty, nearly half have cut back on food to afford childcare and 58% said they were or would be no better off working once childcare is paid for.

The April cuts to the working tax credit have also had a big impact with four in ten of those affected considering giving up work because they will no longer earn enough to cover the childcare bill. The cut has added on average £500 per year on to the childcare bill of low income families, says the Trust.  

Other key findings of the survey are: - A quarter of parents in severe poverty have given up work and a third have turned down a job mainly because of high childcare costs - more than twice as likely as better off parents.
- Of those parents in severe poverty and currently in paid employment the majority (80%)agreed with the statement "Once I have paid for childcare, I am in a similar position to as if I was not working".
- The majority of parents living in severe poverty (61%) said they were struggling to pay for childcare compared to around a third of parents on higher incomes (37%).
- Families in severe poverty were twice as likely as better off families to move home because of the high costs of childcare.
- 26% of parents in severe poverty have been unable to take up education or training because of high childcare costs.
- 63% of parents, regardless of income, say they can't afford not to work but struggle to pay for childcare.
- The costs of childcare are on a par with 41% of families mortgage or rent payments.
- A quarter of parents, regardless of incomes, said the cost of childcare has caused them to get into debt.

Save the Children and Daycare Trust are calling on the government to increase the amount they plan to spend on childcare support under the new universal credit in order to prevent low income families from being priced out of work and into poverty.  

Sally Copley, Save the Children's Head of Poverty, said: "The government is undermining its own ‘make work pay' policy by not funding the costs of childcare for the poorest families. Childcare in the UK is amongst the most expensive in the world and families on low incomes simply don't earn enough to cover the costs and are being priced out of work as a result. The recent cut to the working tax credit has only made this worse with many parents realising they are no better off working and they and their children remain trapped in poverty. The government must give the poorest parents a chance to work their way above the poverty line. We know that the best way out of child poverty is to help parents into work."

Anand Shukla, Chief Executive of Daycare Trust said:  "Daycare Trust hears from parents every day who are being forced to make difficult decisions about their career and family life as a result of Britain's high childcare costs. Being able to work and be financially independent is in the interests of both families and our wider society; yet as our survey shows, parents are being forced out of work as a direct result of how expensive childcare is. If you want welfare reform to ensure that work does pay for low income families, then you need high-quality childcare provision that is affordable for parents."

Save the Children and Daycare Trust are calling on people to ask their MP to call on the Chancellor to give childcare support a boost. Go to www.savethechildren.org.uk/childcare to find out more.

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