Childcare Now Costs More than your Annual Mortgage

Dated:

Chancellor George Osbourne confirmed changes to childcare costs in his 2014 Budget statement. It brings news that some parents may feel some respite in terms of how they pay for childcare. From Autumn 2015, parents will be required to pay 80% of childcare costs of up to £10,000 per child (aged up to 12) to a registered provider. They will get then receive the remaining 20% from the government, tax-free from September next year. Whereas families where one parent does not work are excluded from the scheme, single parents will benefit, but they must meet minimum income requirements which are approximatley £50 a week.

Childcare Costs Rising

According to a report published by the Family and Childcare Trust, families in Britain are currently paying more in childcare costs than they do on their annual mortgage.

The Increasing Cost of Childcare


Average fees for one child in part-time nursery and another in an after-school club are reaching heights of £7,549 per annum.

In 2012, the average annual mortgage payment was just £7,207.

There has been a 27% rise in childcare costs since 2008, making childcare increasingly unaffordable despite government investments. Most parents have to pay for before and after school childcare, as well as child-minders in between.

All children in the term after their third birthday qualify for free part-time early education, however the current system is not working for everyone.

Sharing Childcare with Friends


Back in 2009, 2 police officers were told they had broken the law because they had cared for each other's children for more than 2 hours at a time. The law stated that to do this, they were required to register as early years child minders. It was only after review into the law that family and friends who did something similar would not be scrutinised.

A third of families rely on "informal childcare", this figure may rise if you have a child with a disability.

The poverty trap is catching up with more families than ever, with parents increasingly finding out it does not always pay to work.

Separated Parents Hit the Hardest


Anand Shukla, chief executive Family and Childcare Trust said that the government should "extend early free education to all two-year-olds". Some families who earn up to £300,000 a year are benefitting from the governments investments, Anand believes "lower income families" should be getting more of this benefit when interviewed by BBC Radio 4's Today programme.

Emma Hopkins Jones, an Associate at Simpson Millar LLP commented on the story:

"Families where the parents have separated are hit the hardest by the high cost of child care. The parent who looks after the child may really want to return to work but it is simply unaffordable. This means they have to look at the other parent for financial support, rather than being able to live independently."

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