Parents of young children are spending more than £10,000 a year on childcare, according to a new report which highlights the "significant pressure" families are under to meet the cost of childminders or nursery places. The Institute of Fiscal Studies (IFS) said some are spending "very high amounts," adding to the strain caused by the cost of living crisis.
Fifteen per cent of families with a one-year-old in formal care are handing over more than £200 a week, equal to more than £10,000 per year, The Times reports. Meanwhile half with a one or two-year-old in full-time formal care of 40 hours per week or more have been spending more than £240 a week, which equates to more than £12,000.
"The cost of childcare in England is high compared with other countries, and has risen quickly over time," says the IFS. "According to data from one survey, the cost of a part-time nursery place for a child under two grew by 60% in cash terms between 2010 and 2021 – twice as fast as average earnings, and much higher than the 24% growth in overall prices in the same period."
The report adds: "Even among families with a one-year-old where parents are in work, median weekly earnings in 2019 were £900. So these childcare expenses may cause significant pressure."
The IFS continues: "More than half of families with a pre-school-age child made no payments towards childcare in 2019. Among families whose children are aged one and two, this is due to families either not using childcare (20%) or using unpaid, informal settings such as care from grandparents (33%).
"Eighty-five per cent of children aged three and four use some formal childcare; two-thirds of these households pay less than £20 per week for it. Half of three and four-year-olds do not take up their full entitlement to funded childcare hours.
"Greater support with childcare costs (especially at younger ages) could help these families use more formal childcare, but will not immediately ease existing pressures on their budgets."
Among families using formal childcare, the median family with a one-year-old spent over £90 a week in 2019, said the IFS, adding: "This falls to around £45 among two-year-olds and less than £5 for three and four-year-olds.
"A quarter of families using formal childcare and earning between £20,000 and £30,000 a year spent more than £100 a week on childcare for their one-to-two-year-old – equivalent to more than 17% of their pre-tax income. Overall, 16% of families using formal childcare for a pre-school-aged child report finding it difficult or very difficult to manage these costs."
Location is an important driver of costs, the IFS said. "Among formal childcare users, median spending per week was highest in the East Midlands (around £40) and lowest in London (under £10), but some families in London pay huge amounts per week," it said.
