Rising childcare costs locking some parents out of work 

Childcare costs for children under three have risen by 3%, more than inflation according to the latest report from Coram Family and Childcare.

Only about half of local authorities in England and Wales have sufficient early years places for children, a picture which is much worse for disabled children or families working outside a 9 – 5 working pattern.Coram Family and Childcare logo

Parents may be missing out on vital childcare support because the system is so complex and some are unable to go back to work because costs are too high.

Other key points they raise include:

  • More than 1/3 of LAs believe 30 hours is having a negative impact on financial sustainability of nurseries
  • ¼ of LAs believe 30 hours is pushing up costs for 3 and 4 year olds outside the entitlement
  • 95% of LA say that full time places for under 2s now more expensive than support offered by UC and working tax credits – families may be WORSE off working
  • 1/5 Councils concerned that fewer places available for entitled 2 year olds


Purnima Tanuku OBE, Chief Executive of NDNA, said: “Families and working parents will rightly be concerned about increases in childcare costs, especially for under threes when parents are looking to return to work. 

“Although we have seen an above inflation increase in childcare fees, the costs to providers are much higher too. On top of 2% inflation, that affects the price of everything from food to utilities and resources, employers have an increase in pension contribution and an almost 5% rise in minimum wages to accommodate.  Most providers have also seen a big hike in their business rates bills which puts further pressure on their nurseries. The fact that the fee increase is being kept to a minimum shows how hard childcare providers are working to make their services affordable.

 “The Government claims it offers three and four-year-olds ‘free’ childcare hours, but then does not pay enough to cover delivery costs. Coram Family and Childcare’s research echoes our own findings, that nurseries and parents are paying the price for this shortfall in funding with higher fees for under threes or places being limited.

 “At the heart of all this are the children and the quality of care and early education which they receive. If providers are not meeting their costs, they cannot be investing in their staff and training. This whole report is a damning indictment of the Government’s approach to childcare, showing how underinvestment puts up costs, threatens provision and can actually deter people from returning to work even if they wanted to. We have warned about this ever since the 30 hours policy was introduced.

 “We welcome the recommendations of Coram Family and Childcare, especially the need to simplify the way childcare support is delivered. Our Childcare Passport would allow payments to be made directly to a parents’ provider of choice to meet their needs. We also believe that Universal Credit needs an urgent overhaul so that payments are made up front to prevent parents and providers getting into debt trying to secure childcare so they can return to work. Finally, the Government must review all the costs that childcare providers face to understand why these are rising and how their own policies impact on this. Only by ensuring funding covers costs can they start to undo all the damage being caused to the sector.”

Megan Jarvie, Head of Coram Family and Childcare, said: “Childcare is every bit as vital as schools, healthcare or transport: it supports parents to work, provides our economy with a reliable workforce and boosts children’s outcomes. But too many parents remain locked out of work by high childcare costs and low availability, and too many children miss out on high quality childcare, and the benefits to their life-chances that come with it.
“Recent Government investment is welcome, but as prices continue to rise, families remain at risk of getting left behind. For many parents, making work pay is an uphill struggle. The Government needs to streamline the current maze of childcare support schemes so that families can understand what they are entitled to and access the childcare they need. We need a simple and responsive childcare system that makes sure every parent is better off working and childcare quality is high enough to boost children’s outcomes throughout life.” 

Their recommendations to Government include:

  • Increase the maximum amount of childcare costs that are supported by Universal Credit in order to make sure parents are better off for every extra hour worked, and switch to upfront payments so that parents can afford to move into work.
  • Provide start up grants and responsive funding for childcare providers to increase the availability of childcare places.
  • Extend the 30 hours entitlement to parents undertaking training to make sure childcare costs do not prevent parents from developing the skills and employability that drives social mobility.
  • Improve access to early education for disadvantaged children by doubling the early years pupil premium.
  • Consider how current spend on childcare could be reallocated to better meet the needs of disadvantaged and low income children, including current underspend of the Tax Free Childcare budget.