Childcare prices rise by 3%

Childcare costs have risen by 3 per cent in the last year, meaning parents now pay an average of £127 per week, or over £6,600 per year, for just a part-time nursery place, according to new research from Coram Family and Childcare.

Its annual Childcare Survey 2019 shows prices also vary significantly across the country. It says, for instance, that in Inner London – the most expensive region in the UK – the price of a part time nursery place for a child under two is £175 per week, or £9,100 per year, compared to an average £108 per week in Yorkshire and Humberside, or £5,600 per year.

Availability of childcare is another issue. In England, the report says only just over half of local areas have enough childcare for parents working full time. For those requiring special needs or flexible childcare the picture is even worse with less than a quarter of local areas having enough for disabled children and parents working outside the usual 9 to 5.

Coram Family and Childcare asked local authorities what impact the 30 hours funded childcare policy has had on their local childcare market. While most say either that there has been no impact or that they don’t know:

• One in four local authorities (26 per cent) report that 30 hours is pushing up childcare prices for 3 and 4 year olds outside funded entitlements
• One in three local authorities (36 per cent) report that 30 hours is having a negative impact on the financial sustainability of childcare settings
• One in four local authorities (28 per cent) think that 30 hours will have a positive impact in future on the quality of early education and childcare

Worse off working?

The report says access to childcare support can be very complex too and that some Government support has failed to keep up with childcare price inflation: in 94 per cent of local authorities, a full time nursery place for a child under two is now more expensive than the maximum costs supported under Universal Credit and Working Tax Credit. Families in these areas will find that they may end up worse off working, or working more hours.

Megan Jarvie, Head of Coram Family and Childcare, said: “Childcare is every bit as vital as schools, healthcare or transport: it supports parents to work, provides our economy with a reliable workforce and boosts children’s outcomes. But too many parents remain locked out of work by high childcare costs and low availability, and too many children miss out on high quality childcare, and the benefits to their life-chances that come with it.

“Recent Government investment is welcome, but as prices continue to rise, families remain at risk of getting left behind. For many parents, making work pay is an uphill struggle. The Government needs to streamline the current maze of childcare support schemes so that families can understand what they are entitled to and access the childcare they need. We need a simple and responsive childcare system that makes sure every parent is better off working and childcare quality is high enough to boost children’s outcomes throughout life.”

Actions for affordable childcare

The Childcare Survey 2019 sets out several short term actions Government can take to make it easier for parents to find and afford childcare:

• Increase the maximum amount of childcare costs that are supported by Universal Credit in order to make sure parents are better off for every extra hour worked, and switch to upfront payments so that parents can afford to move into work.
• Provide start up grants and responsive funding for childcare providers to increase the availability of childcare places.
• Extend the 30 hours entitlement to parents undertaking training to make sure childcare costs do not prevent parents from developing the skills and employability that drives social mobility.
• Improve access to early education for disadvantaged children by doubling the early years pupil premium.
• Consider how current spend on childcare could be reallocated to better meet the needs of disadvantaged and low income children, including current underspend of the Tax Free Childcare budget.

Funding issues for providers

Meanwhile, the Government announced plans to provide local authorities with a further £24 million for their Maintained Nursery Schools, to enable them to continue funding them at a higher rate for the 2020-21 academic year. The Early Years Alliance said it did nothing to address long-term sustainability of the sector and only applied to 397 nurseries. It warned there were likely to be closures and raised fees at private and voluntary sector providers due to underfunding of government policies to reduce childcare costs.

A Government report published on Thursday shows that most childcare providers expect their hourly cost to rise and their hourly income to remain unchanged, with the most common planned response to raise parent-paid fee rates, while less common plans included making changes to staffing or to the setting’s child profile or seeking other income sources. It adds that hourly costs may have risen more over the last three years than can be explained by inflation and the minimum wage and pension contribution policy changes.

Childcare campaigners say that the freeze in government funding rates in the period has created an unsustainable funding situation for childcare providers who also face an increase in the minimum wage in April. The study shows 77% of costs are due to staffing.

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