Study charts how childcare eats into parents’ wages

A new study by Nesta shows that how childcare is eating into parents’ salaries, accounting on average for 32% of the median hourly wage, although in some regions and for some parents that figure is more than double that percentage.

Two nursery workers helping children

 

An hour of childcare in England costs nearly a third of the median pre-tax hourly wage, according to a new childcare affordability ratio from the innovation charity Nesta.

The study shows London is the worst area in the UK when it comes to childcare cost, with an hour of childcare costing more than 40% of the median pre-tax hourly wage in four boroughs. London accounts for seven of the top 10 least affordable places in England.

Nesta says that for lower earners childcare takes up a higher proportion of their salary. For a single earner on the London Living Wage (£11.95), the median cost of an hour’s childcare (£7.31) is equivalent to around 61% of median pre-tax hourly income, or around 72% of post-tax income. For a London earner on the national minimum wage (£10.42), the equivalent cost rises to 70% pre-tax and 80% post-tax.

Nesta notes that, because wages vary around the country, other areas are almost as badly affected as London in terms of the proportion of average pay that goes to childcare. These include Manchester, Leicester and Herefordshire which are all in the top 10 least affordable childcare areas.

Nesta says the cost of childcare in the UK is almost twice the average and many parents have seen significant increases in recent months as providers are forced to pass on rising costs.

The report comes as separate research by Coram Family and Childcare shows widespread problems with childcare availability in England and amid reports that the Government is considering changes to Universal Credit to lift the cap, set in 2005, on the amount of childcare fees that can be recouped and to cover upfront childcare fees. The Government is also said to be thinking of changing the childminder registration process to stem the significant decrease in childminder numbers in recent years.

Tom Symons, Deputy Director of Nesta’s fairer start team, said: “We know that families are really struggling and for many that means tough choices between giving up childcare or giving up work. This has a big knock-on effect on children and the economy. Good childcare helps children develop a whole range of valuable early life skills including literacy and numeracy, social and emotional development and communication. There is agreement across the political spectrum that the early years are vital but our childcare system is broken, expensive and in desperate need of reform.”



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