Issue date
03 Sep 2018
Fees up by 47%, compared to 11% increase in nominal wages Families left with £4,700 annual shortfalls even after government support

Working parents in the East Midlands with children under five have seen nursery fees rise three times faster than their wages over the past decade, according to new TUC analysis published today (Monday).

The analysis shows that childcare costs have rocketed by 47% per week since 2008 for families in the East Midlands with a full-time and a part-time working parent. Over the same period their wages have gone up by just 11%.

On average across England childcare costs have increased by 52% per week since 2008 for families with a full-time and a part-time working parent, while wages have gone up by just 17%.

Over the past 10 years the growth in nursery fees for families with a full-time and a part-time working parent has outstripped wages the most in the West Midlands, followed by the South East and the North East.

The situation is even worse for lone parents. Childcare costs for a single mum or dad working full time have risen seven times faster than earnings.

Fees in England are now on average:

  • £236 a week for a child under 2 in nursery, compared to £159 in 2008
  • £232 a week for a child over 2 in nursery, compared to £149 in 2008.

Shortfall in support

The analysis shows that despite government support (including free nursery hours for some working families and the new tax-free childcare scheme) families are still being left with huge childcare bills. Looking at parents with a 3-year-old and a 1-year-old:

  • A family on average earnings (with a parent working full-time and a parent working part-time) has to stump up more than £4,700 a year to cover fees.
  • A low-income working family (with a parent working full-time and a parent working part-time) needs to find nearly £2,000 a year.
  • A single parent on average earnings (working full-time) pays just over £6,000.
  • A single parent on average earnings (working part-time) has to fork out £1,900.

TUC Regional Secretary Lee Barron said: “Working parents have seen childcare fees rocket, as their wages have stagnated.

“Despite government support families still face eye-watering nursery bills.

“Britain’s cost of living crisis is having a huge impact on working mums and dads.”

Ellen Broomé, from Coram Family and Childcare, said: “Successive governments have rightfully invested in childcare but, while this investment has been welcomed, many parents remain frozen out of work because of high childcare costs,

“We know that high quality childcare boosts children’s outcomes, benefits the economy and allows parents to make genuine choices about work and care. But in the last year alone, childcare costs have risen by 7%. Urgent action is needed to make sure all parents are better off working after paying for childcare.”

Recommendations

To address this increasing pressure on working families, the TUC would like to see:

  • Subsidised, affordable childcare from as soon as maternity leave finishes. This would enable parents to continue working and mean mums don’t continue to have to make that choice between having a family and a career. There is currently a real gap in childcare support for one-year-olds until government assistance kicks in at age 2 or 3.
  • More government funding for local authorities to provide nurseries and childcare.
  • A greater role for employers in funding childcare. Either through direct subsidy to employees or the provision of on-site childcare facilities.
  • Increase the childcare support provided by tax credits and Universal Credit. Including by reversing cuts to the UC work allowance, scrapping the unfair ‘two child’ policy lifting the cap on benefit uprating.
Editors note

Growth in nominal wages for working couples with children under 5 compared to growth in nursery costs by English region from 2007/08 to 2017/18

Area

% change in mean nominal wages for couple: 1 FT 1 PT with pre-school children

Growth in nursery costs from 2007/08 to 2017/18

Number of times childcare has risen faster than wages

West Midlands

7%

61%

8.7

North East

12%

58%

4.8

South East

12%

54%

4.5

East Midlands

11%

47%

4.3

East of England

12%

41%

3.4

Inner London

23%

79%

3.4

Yorks and Humberside

16%

54%

3.4

England (overall)

17%

52%

3.1

North West

19%

44%

2.3

South West

24%

48%

2.0

Outer London

24%

26%

1.5

Source: Wage data for couple households with one full-time and one part-time worker and children aged under 5 from Labour Force Survey (LFS) 2007q2 to 2008q1 and 2017q2 to 2018q1 inclusive. Childcare costs data provided by Coram Family and Childcare.

Annual childcare cost shortfalls for different family types in England after government support for childcare has been taken into account, in £ and as a proportion of net household income (2017/18)

Annual childcare cost shortfall after government support for median earnings household

Annual childcare cost shortfall after government support for low earnings household

Couple household, one full time earner, one part-time earner, one 3-year-old and one 1-year-old.

£4,746 (14%)

£1,910 (8%)

Single parent household, one part-time earner (21 hours), one 3-year-old and one 1-year-old.

£1,910 (28%)

£1,910 (36%)

Single parent household, one full-time earner, one 3-year-old and one 1-year-old.

£6,098 (41%)

£6,098 (50%)

Couple household, one full-time earner, one part-time earner (21 hours), one 1-year-old.

£4,746 (14%)

£1,910 (8%)

Single parent household, one full-time earner, one 1-year-old.

£1,910 (13%)

£1,910 (16%)

- Net household incomes have been calculated using the Landman Economics tax benefit model and average weekly wages for FT and PT earners in couples and lone parents at the median and 25th percentile of the relevant subgroup distribution of wages. Wage data are from the Labour Force Survey for 2017 quarter 2 to 2018 quarter 1 inclusive.

- As the vast majority of eligible families with children are in receipt of tax credits rather than universal credit the analysis looks at support available under the tax credit system. However, under Universal Credit there will still be significant childcare cost shortfalls for all families considered in the analysis.

- If families are not taking up entitlements they are eligible for then shortfalls will be even lower.

- This analysis was undertaken for the TUC by Landman Economics. Childcare cost data were provided by Coram Family and Childcare.

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