Surviving Increasing Childcare Costs

Are you worried about the ever-rising cost of childcare? If so, I don’t blame you. The UK has the third most expensive childcare system in the entire world and in a recent survey, 97% of people expressed concerns that childcare is too expensive. The result is that many parents across the UK are in a difficult situation, they need to work to pay the bills, but they also need to pay for childcare so they can work. As if raising a child wasn’t already expensive enough in this climate, childcare is an extra expense that some people are struggling to pay for. If you’re panicking right now about the rising costs of childcare then this article is just for you. Today I have for you the ultimate guide to surviving increasing childcare costs as a working parent.

The childcare situation facing parents and nurseries in 2023

There was a debate on the affordability and availability of childcare in the House of Commons, on the 21st of February, 2023. The debate focused on challenges caused by the systematic underfunding of early years provision that are being exacerbated by the rising cost of living and inflationary pressures. This is limiting the financial availability of childcare in a significant way.

It is also important to point out that the childcare providers are not to blame here. Research by the National Day Nurseries Association (NDNA) found that 95% of nurseries in England did not have enough funding to cover their basic costs after the impact of the Covid-19 pandemic on their incomes, while 85% said they would run at a loss or break even this year. Furthermore, over 11,000 childcare places were lost during the Covid-19 pandemic, according to the NDNA, as 232 nurseries closed between April 2020 and March 2022.

Childcare options and costs in 2023

Childcare options available in the UK include nursery, childminders, nannies, shared nannies, au pairs and of course relatives. Then, when a child turns three they have the added option of pre-school and an entitlement of 15 hours. Once children are at school age, working parents often need to consider breakfast clubs, after-school clubs, after-school childminders or nannies if possible to help with the school run, in addition to help over the holidays.

Nurseries within London can cost between £55-£65 for a full day at nursery (8am-6pm), which will usually include breakfast, lunch and snacks, or around £30-£35 for a half day. With some nurseries the cost decreases as the child gets older.

Childminders are more flexible with opening and closing times and can often do those little favours of starting early or finishing late on those odd occasions. Depending on where you are in the country, they charge from around £3.50 up to £7 an hour. Nannies tend to be the more expensive option Expect to pay anything from £8 an hour depending on the number of children. If you employ a nanny you also have to pay their tax, NI and expenses such as petrol. You would also need to pay the nanny agency to arrange payslips or use ‘taxingnannies’ so it adds up financially.

What financial help can you get for childcare costs

Since 2010 the government has doubled free childcare for eligible working parents of 3-4 year olds, from 15 to 30 hours per week, worth around £5,000 per child per year. They also introduced tax-free childcare, providing working parents up to £2,000 of childcare support a year (£4,000 for disabled children). Additionally, all 3 to 4-year-olds in England can get 570 hours of free early education or childcare per year. This is usually taken as 15 hours each week for 38 weeks of the year. The free early education and childcare can be: all types of nurseries and nursery classes, playgroups and pre-school, childminders and Sure Start Children’s Centres.

Unfortunately the government-funding only covers £3.60 per hour of a nursery placement and isn’t enough to cover the £6 or so hourly rate that nurseries charge. In some cases, parents need to pay for the ‘free’ hours in advance and are then later refunded once the nursery has received the funds from the government at the end of the term, resulting in an outlay of £740 to account for.

How to plan for rising childcare costs

If you’re returning from maternity leave, you need to consider whether your old job will still fit you and your new life-situation. Flexible working is now a legal entitlement. However, that does not mean that your employer has to let you have it. Usually you will have arranged this with your employer before you go on maternity leave, however, some people do not realise how much having a baby changes their values and opinions about working. It’s never too late to speak to your boss and see if you can work out an agreement that suits you both.

You should also consider the working commitments of your partner – are they more flexible, would they be able to be at home part-time to reduce childcare costs? What I’ve learnt is two things. If you are employed and about to have kids, stay employed and enjoy the sick pay and holiday pay whilst the kids are young.

If you are self-employed or a business owner, about to have children, the business model needs to be set up so that you aren’t IN the business running things all the time. You could also diversify your income streams so you aren’t fully dependent on it just in case. If you can’t do this, one option would be to go and get a part time job for a bit or pause the business and go full time, enjoy the benefits employed jobs provide you.

Preparation is the key to surviving rising childcare costs

Everyone’s financial situation is different and some advice is not applicable to everyone, however I hope there has been something of use in this blog for any anxious parents out there. Remember you aren’t alone, reach out to others around you. Ask in local groups. Women tend to support each other in these situations so don’t be afraid to ask for help.

Do you want financial advice that is tailored to your financial situation and from a mother who has been in your current situation? Get in touch with a trusted financial adviser today to figure out the best path forward for you.

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