THE BLOG

Not All Prices Are Falling as Cost of Childcare Is on the Rise

21/01/2015 16:19 GMT | Updated 23/03/2015 09:59 GMT

Hooray! Petrol, energy and food prices are coming down at long last, albeit more slowly than they should have done.

So families should have a lot more spending money. That's the theory but the reality is rather different. First wages have still not gone up in real terms for most workers. And secondly there are some costs that are still rising - housing, train and bus fares, insurance and care, particularly childcare.

The latest survey of childcare costs shows a rise of 30% in the last five years, with many parents saying they are considering reducing their working hours, according to 4Children. Many report that the second salary in a family goes entirely on paying for childcare and they have cut back on essentials to pay for a nursery or childminder.

The cost of childcare continues to be the main issue raised by parents leaving reviews of providers on Good Care Guide.

So is there any sign of respite for families on the horizon?

The short answer is no! Parents can expect to pay higher childcare bills for some time to come. Here's why.

Historically childcare has been underfunded. Childcare has been subsidised by providers and by childcare staff, many of whom have been paid at or just above minimum wage.

Childcare is labour intensive with set child-staff ratios. As childcare staff rightly get better trained, they want better pay.

In addition providers delivering the free entitlement of 15 hours childcare a week for three and four year olds (and now some two year olds) complain that they are not properly funded. They say that local authorities pay them below the real cost of providing 15 hours childcare, with some councils paying quite a bit less.

As a result providers have had to increase the prices they charge parents for any childcare they use above and beyond the free 15 hours to cross-subsidise the free provision. So parents are facing higher bills.

If free childcare is extended to 25 hours a week, as for example proposed by Labour if elected in May, then it needs to be properly funded. Otherwise the situation above will simply be made worse.

If the current government is re-elected, then they plan to introduce a 20% tax break on childcare spending up to £10,000 a year. Apart from the fact that this will mainly benefit better off families, there are fears that the tax break will drive up childcare prices.

In the meantime families on low and mid incomes are increasingly relying on a mix of free childcare where available and their family and friends, particularly grandparents, for the rest as well as working all kinds of shift patterns on low pay.

They used to say that you should work to live, not live to work. Now many parents work for childcare.

And while families shoulder the rising cost of childcare, the latest research from Age UK shows that they are also being expected to pay for or undertake more care for their elderly relatives.

This growing crisis in care for all ages is having a huge impact on working families, many of whom are facing the cost squeeze from all directions. It will be some time before most families feel their household coffers seem more than half empty.