Childcare costs forcing parents in England to delay or forgo another baby

·4-min read

Most parents with young children would delay having another due to nursery costs that are already forcing some to cut down on essentials, according to new research released amid growing calls for sweeping reforms to childcare.

With the chancellor, Jeremy Hunt, looking at measures that could reduce childcare costs, which are some of the most expensive in the world, prominent providers are to hand a joint letter to Downing Street demanding action on increasing state help, improving care standards and creating a simpler system of assistance for new parents.

A survey of 1,000 parents with children under four commissioned by the group found that 63% would delay having or not have another child due to high childcare costs. Almost half said their childcare provider had increased their fees in the past six months, while 32% also said they were cutting down on essentials such as groceries to afford childcare costs.

Of the parents surveyed, 70% said they would work more if childcare were available for free. Treasury insiders accept that childcare costs are one factor keeping some people out of the labour market. However, the option of extending 30 hours of free childcare to one- and two-year-olds in England at the spring budget has been rejected on cost grounds. The plan would cost about £6bn, roughly equivalent to a 1p increase in the income tax rate.

Officials are examining cheaper options. One idea already making its way through parliament would see workers given the legal right to ask for flexible working from their first day on a job. Currently, employees only qualify for that right after six months. Officials believe extending that right to the moment someone starts a job could encourage new parents back into work at an earlier stage.

Campaigners call on on the government to introduce reforms on childcare, parental leave and flexible working, in London on 29 October 2022.
Campaigners call on the government to introduce reforms on childcare, parental leave and flexible working, in London on 29 October 2022. Photograph: Wiktor Szymanowicz/REX/Shutterstock

A group including the National Day Nurseries Association (NDNA), the London Early Years Foundation (LEYF) and the Fatherhood Institute, have all signed a letter to Rishi Sunak calling for radical change and warning reforms to childcare have been “deprioritised”. They warned not taking action would “have a devastating impact on families and the economy”.

“The UK is the third-most expensive country for childcare, according to the most recent OECD figures,” they wrote. “The proportion of wages spent by British parents compared to French parents is more than double. It’s not uncommon for parents, especially in London and the south-east, to actually spend most of their income on childcare. In 2023, parents face a steep increase in nursery costs as government funding is falling in real terms while staffing and energy bill costs are rising.

“The patchy nature of the childcare system means parents also struggle to understand all the support available to them, while free childcare up to 15 hours per week is only available universally for children aged three and four in England. This leaves an unjustifiable gap in support from the end of parental leave.”

The Observer has already highlighted concerns from childcare providers that they are struggling with higher food costs, even as many report more children arriving to their settings hungry. Some have turned to charities to help provide food in their settings.

Related: Tory backbenchers plan to put pressure on Hunt to cut childcare costs

June O’Sullivan, the LEYF’s chief executive, said: “It’s shocking how drastic underfunding by the government is driving the cost of childcare up and the quality of service down across many nursery providers. This is particularly disgraceful given it impacts even more on children from disadvantaged backgrounds.” Rajan Lakhani, from the money app Plum which oversaw the research, said there was a “very real risk that many parents will be forced to work less or even drop out of the workforce altogether as childcare fees become unaffordable”.

A Department for Education spokesperson said: “We recognise that families and early years providers across the country are facing financial pressures. That’s why we have spent more than £20bn over the past five years to support families with the cost of childcare. The number of places available in England has also remained broadly stable since 2015, with thousands of parents benefitting from this.”