THE BLOG
05/03/2015 07:13 GMT | Updated 05/05/2015 06:59 BST

The Real Reason why British Childcare Costs Have Risen by 33% for Children Under Two During This Government

The cost of childcare is a huge election issue. If you're a family with a toddler or two, it's probably your biggest single bill.

Before you became a parent, your mortgage or rent seemed a real millstone.

Now that's outweighed by the price of having someone look after your little ones while you're out earning money and progressing your career.

A recent survey by the Family and Childcare Trust said the cost of a part-time nursery place for a child under two has increased by 33% over the course of this government.

But I don't think people are really asking why.

Do they just think that nurseries are putting up their prices to rake in profits? That's not the case at all.

The real reason is that you are probably subsidising other children's early years education, at no fault of your nursery.

This happens because of a government flagship policy that's designed to ease the burden of childcare. It does just that for some parents but sadly it ups the costs for others.

We're talking about free childcare for all three and four-year-olds, and some two-year-olds.

The deal is currently 15 free childcare hours a week in term-time, a hugely popular policy that's likely to be extended by future governments.

Some parties are talking about upping free childcare to 25 hours or increasing the age range of children who are eligible as young as to babies of nine-months-old.

It looks great, doesn't it? Especially if you've spent a couple of years paying in full. But, without better levels of funding, this is a daunting prospect.

The picture is complex but, put simply, nurseries make a big loss on these free places.

Our own research showed on average nurseries lose £809 per funded three or four-year-old place per year and £712 per two-year-old place.

The average hourly rate received by nurseries is £3.80 per child per hour, though this varies between local authority areas. That doesn't cover the cost of providing the high-quality care that's expected of them - and it hasn't done for years.

Cutting corners to save money is never an option but most nurseries are small businesses with increasing costs such as utilities and business rates. They have no option but to put up prices to parents whose children don't qualify for free places or for the extra hours parents buy on top of the free 15, just to balance the books.

As the Lords Select Committee on affordable childcare recently put it, families who pay for their nursery places are subsidising the ones who get their provision free.

So there you are, that's the biggest single reason why the bill for an under two-year-old has risen so steeply.

Really, there's no such thing as a free nursery hour - parents are paying and so are their nurseries. However, there could be.

NDNA is calling for a full review of the funding system and for a new, realistic and consistent level of payment to be set as part of its Childcare Challenge to the next government.

That way, the sums would add up, nursery costs for paying parents would be more affordable and more free hours would be a great prospect for everyone.

Read NDNA's Annual Nursery Surveys in full here