Financial News

  • 4 March 2014, 7:03

Childcare Cost 'Outstrips Average Mortgage'

A report claims the economy is being failed by a childcare trap that makes part-time care more expensive than the average mortgage.

The Family and Childcare Trust identified an annual inflation-busting increase in costs since 2002, with parents handing over more than a quarter of their salary making it the most expensive childcare in Europe.

The study said: "Our research shows that the current childcare system is not working for anyone.

"Children are losing out on vital early education and families remain trapped in poverty because they cannot make work pay.

"Childcare providers struggle with debts. Women fail to return to the labour market after they have children and the economy loses their skills and their taxes.

"The state faces greater welfare bills and high administrative costs for delivering a complex support system."

The report found that parents are handing over more than 7,500 a year for childcare for two children, around 4.7% more than the average mortgage bill.

Its conclusions were based on information from nurseries, schools providing after-hours clubs and childminders in England, Wales and Scotland.

A family with one two-year-old child attending nursery part-time (25 hours a week) and a five-year-old in an after-school club will pay out 7,549 a year on average.

This is higher than the UK average annual UK mortgage, which the report says is 7,207 according to official data.

Nursery costs for under twos had risen in all areas of Britain over the past 12 months, the study said, by an average 3.3% though after-school club prices had fallen.

The Government responded by insisting that the cost of childcare in England had fallen for the first time in 12 years.

Education and Childcare Minister Elizabeth Truss said: "After 12 years of consistently rising prices, costs in England have stabilised for the first time - In fact once inflation is taken into account costs for the majority have actually fallen.

"This means more parents are able to access affordable childcare and support their families.

"These reductions contrast with rising costs in Scotland and Wales, highlighting the difference this Government's reforms are making."

Labour accused ministers of failing to tackle soaring childcare costs - pledging to extend free childcare for three and four year olds with working parents from 15 to 25 hours a week.

:: Watch Sky News live on television, on Sky channel 501, Virgin Media channel 602, Freeview channel 82 and Freesat channel 202.

Advertisement