Childcare costs rise by 4% as providers struggle to remain sustainable 

Coram Family and Childcare has revealed in its latest survey that childcare costs have risen by 4% as providers struggle to remain sustainable throughout the Covid-19 pandemic.Coram Family and Childcare logo

The 21st annual Childcare survey released today about childcare costs and availability across the country also showed: 
  • 39% of local authorities in England reporting that providers have increased their prices 
  • 32% reporting that some providers have reduced free early education entitlement places
  • Britain’s parents are paying 4% more for childcare for children under two
  • Childcare costs rising well ahead of inflation and are now paying an average of £138 per week - over £7,000 per year - for a part-time nursery place for a child under two.* 
  • 5% more for children aged two than they were one year ago
  • 30% have seen providers increase the number of children looked after by each staff member
  • Over a third (35%) of local authorities in England reporting a rise in the number of providers in their area permanently closing in the last year
  • Working parents of three and four year olds in England and Wales can get 30 hours of funded childcare a week. If they need to pay for 20 extra hours to take this up to a full time place (50 hours a week) the average price in a nursery will be £101.58 in England, £89.12 in Wales. 
  • In Scotland, all families are entitled to 600 hours of funded childcare per year. If they need to pay for an extra 34 hours a week to take this up to a full time place (50 hours a week), the average price in a nursery will be £145.70. By August 2021, all three and four year olds in Scotland will be able to access 1140 hours of funded childcare per year which will reduce costs for families. 
  • England, Scotland and Wales all still see significant gaps in childcare sufficiency for disabled children, parents working atypical hours and school age children.
  • 73 per cent of local authorities reported a fall in demand for childcare in their area.
There are seven different types of childcare support available – the complexity of the system means that far too many people are not getting the help they need.

The survey also sets out actions that Scottish, Welsh and UK governments can take in the short term to fix urgent problems in the system. 

Purnima Tanuku OBE, Chief Executive of NDNA, said: “It comes as no surprise that the early years sector is suffering as a result of the pandemic with the twin challenges of low attendance and higher operating costs.

“But this report lays bare the full extent of the damage as providers struggle to remain sustainable while carrying out their crucial work of supporting children’s development and enabling parents to work or train.

“Nurseries only have two streams of income, parental fees and Government funding. The main reason for fee increases are to bridge the gap between the funding shortfall between Government paid rates and the real costs facing nurseries. Costs like staffing are due to rise again in April when minimum wages increase. 

“Parents and families need high quality reliable and flexible childcare – most of which is delivered by private, voluntary and independent nurseries. However, these cannot survive on thin air, they have staff and bills to pay. The Chancellor’s Budget offered some reduction to Business Rates but little other support to nurseries.

“It’s clear from the report that those providers who cannot put up their fees to bridge the underfunding gap are sadly facing closure. Our own research has shown that tens of millions in early years funding is not reaching the frontline. Unless this problem is fixed, more childcare businesses will shut permanently and places will be thin on the ground.

“The research echoes our own findings of lower demand for both funded places and fee paid hours. It’s clear that funding needs to be reviewed and fixed to support providers on the frontline. If the Chancellor was committed to doing ‘whatever it takes’ to support childcare providers and working families there would have been more support to the sector in the Budget. That’s what our children need to get the best possible start in life.”

Megan Jarvie, Head of Coram Family and Childcare, said: “The pandemic has reminded us all of the vital importance of childcare, in enabling parents to work, boosting children’s learning and narrowing the gap between disadvantaged children and their peers. However, the crisis has also exacerbated the issues that exist in the sector. For too many families the system simply isn’t working, and they are left struggling to make work pay after childcare costs or are forced out of the workplace entirely. 

“There remains a risk that many providers could close, leaving more families struggling to find the childcare that they need, or that costs could further increase, at a time when family finances have already been stretched by the pandemic. Financial support from the Government has helped childcare providers to stay afloat, but we don’t know what the effects will be when this support ends. We’re calling for the Government to take urgent steps to improve the system now and in the longer-term so that every child can access the high quality childcare that supports their early development.”

Read the full report here.