Calls for business to take action are growing as UK workforce struggles with rising cost of childcare

A new report published by the Family and Childcare Trust, alongside Parental Choice, has revealed for the first time that the high cost of childcare is preventing millions of parents from working, with industries who rely on shift work being particularly hit.

Currently, over 4.4 million parents (34 percent of all parents with dependent children) are living in a household where one or both parents are not working, but this new report reveals that nearly half of these families want to find work or work more hours.

With parents in the UK now paying a quarter of their income on childcare costs, more than any other country in the EU except Switzerland, a significant 23 percent of British mothers who are not in paid employment now cite childcare issues as the main reason they are unable to enter the job market.

It is not only the price but the availability of childcare that is now seriously affecting parents’ ability work. Despite successive governments’ welcome attempt to help families with their childcare costs through schemes such as tax credits and childcare vouchers, the report found a strong relationship between the costs of childcare and the levels of parental employment.

To exacerbate the problem, only 43 percent of local authorities in England, and 18 percent in Wales, report that they have enough childcare for working parents. These figures fall to 14 percent and zero percent respectively for parents who don’t work ‘9 to 5’, a situation which could have a huge knock-on effect in industries such as health care where staff routinely work shifts.

The new stats prove that there is lower parental employment in areas where childcare costs are highest. The last 10 Labour Force Surveys have consistently shown around 40 percent of unemployed mothers with dependent children want to join the workforce, and now, using census data on the employment of parents with dependent children and data from the Family and Childcare Trust’s annual costs survey for that year, this new report demonstrates a clear negative correlation between the price of a part-time nursery place and levels of parental employment.

London the most expensive area for childcare

West End London

The situation in the capital has reached a critical level, with childcare costs 32 percent higher than the UK average

With nursery prices revealed to be 32 percent higher in London, the situation in the capital has, not surprisingly, reached a critical level. The most expensive nursery in Britain was found in London, where parents of an under-two year old would pay £494.22 every week for part-time childcare.

In Tower Hamlets for example just 31 percent of adults with dependent children lived in households where both parents worked, or were working single parents themselves. At the other end of the scale, this figure rises to 76 percent in South Gloucestershire, Rutland and Leicestershire.

With conclusive evidence that the UK workforce is being hit in areas of high childcare costs, it is now up to business to take steps to support working families and ensure that parents are not forced out of employment. All childcare for under-fives has risen by at least 27 percent in the last Parliament, and the average cost of part-time care from a childminder has risen by 4.3 percent in one year, and now costs £104.06 per week or £5,411 a year. As the Government moves forward with plans to tackle childcare costs and availability, the focus needs to be on how businesses can help working parents remain in work.

Julia Margo, Chief Executive of the Family and Childcare Trust, said: “Without investment, the childcare system will not be able to cope with the increased demand, and families will continue to be denied the opportunity to re-join the workforce or take on extra hours of work. We want the government to use the £535 million worth of savings from the delay to the roll out of tax-free childcare to invest in flexible childcare for working parents.”

Sarah-Jane Butler, Chief Executive and founder of Parental Choice, added that getting parents back into the workplace should not be left to the Government alone: “The onus must be on businesses to put in place practices such as compressed hours working, home-working and flexible start/finish times. Achieving high levels of parental employment is vital. Households where both parents work are much less likely to live in poverty. In addition parents who work contribute to the nation’s economy, whilst businesses need to have access to the best possible talent and a workforce who can afford to work.”

Tax-free childcare

In June, David Cameron has brought forward plans for his election promise of double the amount of free childcare for working parents with children that are three and four years old.

The Childcare Bill introduced then would increase free childcare from 15 to 30 hours a week, and would be accessible to some parents from 2016 – a year earlier than originally planned – claiming to save them up to £5,000 a year.

However, Sarah-Jane Butler then described the scheme as too good to be true, saying, ““I think the idea makes a good headline but even now the 15 hours of childcare available is not exactly free as nurseries and child-minders can’t provide the quality and safety parents and children deserve for the amount the government provides. So parents shouldn’t be misled. There will still be costs to pay.”

InsideHR webinar on tax-free childcare


The InsideHR webinar series explores, discusses and develops the latest trends and hottest issues affecting HR practitioners in the UK

The upcoming changes to childcare vouchers will affect millions of families and thousands of companies across the UK.

In the first of our ‘InsideHR’ webinars in March 2015, our panel looked at the proposed changes, how they will impact employers and employees in the UK as well as the strategies available to keep your staff informed and involved.

To access the webinar, entirely free, visit the InsideHR tax-free childcare webpage and click ‘Register’.