A new report from Gingerbread.
Paying the price: The childcare challenge finds half of single parents (47%) have had to borrow money from friends, family or banks to pay for childcare in the last two years [1].
The report also shows that a decade old cap on the childcare costs parents can claim back means that, even with the extra help set to be rolled out under universal credit – where support will rise from 70 to 85% of costs – for many single parents it still won’t make financial sense to work more hours. [2]
Single parents facing very high childcare costs – for example, those living in London and the south-east – will be worse off if they move from part-time to full-time work [3].
Gingerbread Chief Executive Fiona Weir said:
“Childcare costs are putting single parent families under severe financial strain. Childcare just isn’t affordable for many and it is very worrying that single parents are having to turn to friends and family banks and credit cards to try and cover costs.
“We welcome government plans to increase the amount of support available – but the cap on costs means too many single parents will see little benefit. The government must honour its commitment to make work pay and swiftly bring in extra financial support – parents can’t afford to wait any longer.”
Although low-income parents will be able to claim up to 85 per cent of costs under universal credit, this will still be capped at a limit which has remained unchanged since 2005: £175 for one child and £300 a week for two or more children [4]. Since then the average cost for a part-time nursery place has increased by around 70 per cent [5].
The report was part-funded by the Trust.
Single parent Karen, from Surrey, has two children, aged four and five:
“I’m living in my overdraft. Although tax credits do help with childcare costs, the expense is still crippling. Childcare costs are my biggest monthly outgoing. I’m lucky to work in a school so it means I don’t need childcare for my daughter during the holidays, but money is still really tight.”
Gingerbread is calling on the government to raise the maximum amount of childcare costs that low income families can claim, to reflect the actual costs families face; to bring in the extra support in Autumn 2015, at the same time as tax-free childcare and to carry out a review of childcare support systems to check they are fit for purpose in delivering affordability for all.
[1] 47% of single parents polled had borrowed money to help pay for childcare in the two years prior to the survey.
[2] From April 2016 the amount of childcare support that low-income parents can claim back under universal credit will increase from 70% to 85%.
[3] A single parent moving from part-time to full-time work, with two children aged one and four, will lose around £53 a week when working at the minimum wage and paying London childcare costs.
[4] Under tax credits, low income parents can claim up to 70 per cent of the cap, so £122.50 a week for one child and £210 a week for two or more children. Under universal credit, from April 2016, this will be up to 85 per cent of the same maximum costs, so £148.75 a week for one child and £255 a week for two children.
[5] Based on costs from Daycare Trust and Family and Childcare Trust annual childcare costs surveys. Costs for a part-time (25 hours) nursery place have risen by 67 per cent for under-twos and by 70 per cent for over-twos in cash terms.
11 March 2015