Over the summer Daycare Trust and Save the Children surveyed more than 4,000 parents from across the country to ask them about the true cost of childcare. Why did we do this?
Well, we know from Daycare Trust’s annual childcare costs survey that childcare costs have risen every year over the last decade. We know from OECD data that parents in the UK contribute more towards childcare than any other country, spending on average 33 per cent of their net income on childcare. And we know from our survey of London childcare providers earlier this year that parents’ inability to pay for childcare has emerged as the biggest sustainability issue for providers in the capital.
What our new survey sought to do was paint an accurate picture of how this cost actually impacts on families’ day-to-day lives, from the decisions that parents are forced to make about their careers to how much they spend on their weekly food shop. We wanted an insight into how the numbers unearthed by our research translate into real effects on the lives of families who are stuck in the childcare trap.
By the ‘childcare trap’ we mean the position that parents find themselves in where they can’t afford not to work, but struggle to pay for the childcare they need in order to hold down a job, often finding themselves no better off compared to living on benefits.
Nearly two-thirds of the parents that we surveyed, regardless of income, told us that they were in this position. The impact was even worse for families living in severe poverty (those living on under £12,000 per year). Of those parents in severe poverty and currently in paid employment, 80% agreed with the statement 'Once I have paid for childcare, I am in a similar position to as if I was not working'.
Additionally, 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.
It is no surprise that so many childcare providers are concerned about parents not being able to meet their childcare fees. A quarter of parents, regardless of income, said that the cost of childcare had caused them to get into debt. 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%).
This isn’t surprising given that childcare costs are also one of the main outgoings that families face: 41% of respondents told us that their childcare costs are on a par with mortgage or rent payments.
We will be using the findings of this survey to lobby the government to offer a level of childcare support in the new Universal Credit which will actually make it financially worthwhile for parents to work.
We want the government to fund 80 per cent of childcare costs up to current weekly limits for all eligible parents, including those working fewer than 16 hours per week. This will cost around £600m, but we believe it is essential to make work pay and lift families out of poverty.
We know that the cut to Working Tax Credit which came into effect earlier this year is already having an impact. From April, the maximum amount of childcare costs covered by the tax credit system was reduced from 80 per cent to 70 per cent. As a result, many families with two or more children are losing an average of £546 per year. Four in ten of those affected by this change told us that that they are considering giving up work because they will no longer earn enough to cover their childcare bill.
When we consider that nearly half of families living in severe poverty have cut back on food to afford childcare; and that they are twice as likely to have cuts back on household bills and after-school activities as those on higher incomes, it is startlingly obvious that this is an additional financial burden that many families simply cannot shoulder.
In short, our survey outlined a picture of families across the country, who both want to and need to work, yet are either being priced out of the job market by childcare costs or having to cut back on basics in order to make ends meet. It paints a very different picture to the government’s stated aspiration of a society where work pays for all.