Big increase in parental debt due to cost of living crisis

The cost of living crisis, including rising childcare costs, mean 45.9% of parents in England with a child under the age of five years old say they have accrued debt or had to withdraw money from their savings to pay for childcare – a 30% increase from 35.2% last year, according to new research.

Pregnant Then Screwed surveyed 35,800 parents. Women In Data® then extracted a nationally representative sample of 5,870 parents to create a 2024 State of the Nation childcare report. Much of the data could be compared directly to the same survey conducted in 2023.

The report found that one in five parents (21.5%) with a child under five years of age had to withdraw money from their savings and pension to pay their childcare bill, and 37.1% said they had to use credit cards, take out a loan or borrow money from family or friends. The figures rise sharply for single parents with a child under five years old, almost two-thirds (66.5%) of whom accrue debt to pay for childcare, including 50% who borrow money and 31.3% who withdraw money from their savings and pension pot to plug the gaps.

In 2023 the same survey found that 35.2% of parents had to rely on some form of debt, or withdraw money from their savings to pay for childcare, with 27.6% saying they have had to borrow money and 15% saying they have had to withdraw money from savings or their pension.

Currently, women retire with a third less in private pension savings than men due to the accumulation of pay differentials and the knock-on effect of caring responsibilities.

Half of parents with a child under five years of age in England (53%) say they spend more than a quarter of their household income on childcare, up 16% from last year, whilst one in five parents (19.2%) say they spend more than half their household income on childcare.

The survey also identified childcare availability as an issue. A third (34%) of parents said their childcare provider has a waiting list longer than nine months and only 13% of parents said there is no issue with childcare availability near them.  Women are more adversely affected.

A third (33.6%) of mothers in England say they are unable to return to work full time due to childcare costs or availability, compared to just 11.9% of fathers. Meanwhile, 20% of mothers in England are unable to take up a more senior role due to childcare costs and availability compared to 8.8% of fathers.

Joeli Brearley, CEO and founder of charity, Pregnant Then Screwed said: “We’ve not only got a cost of living crisis, we’ve got a cost of working crisis that disproportionately impacts mothers.”

The survey also found that 85% of parents agree with the statement – ‘’I tend to view childcare costs as prohibitive of having more children’’ and 52.5% of mothers who have had an abortion either somewhat agree or absolutely agree with the statement “I believe that the cost of childcare was the primary reason for me to terminate a pregnancy”.

The Government has pledged a reduction in childcare costs starting 1st April. However, only 35% of parents in England agreed with the statement “I think childcare costs will be less of an issue for my family in 2024 due to childcare schemes announced by the Government”. This was reduced to 15% for single parents and 27% for Asian parents. 90% of parents in England agreed with the statement “I do not believe the Government’s promise that childcare costs will reduce”.  Even when a family is eligible for free hours, and there are places available close by, almost a quarter (23%) of parents said they couldn’t afford to access those hours due to the top-up fees charged by nurseries for sundry items such as nappies and food.

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