Thursday, 5 July 2012

Childcare costs - a national picture

A couple of news items have caught my interest recently. The first was in May when the Government decided in their infinite wisdom to change the income support rules for single parents. From May all single parents whose youngest child was 5 was removed from income support and placed on the Jobseekers Allowance register. This meant they had to be seen to be actively seeking work, which in itself isn't such a bad thing, however there is a catch.

Previously, this only happened when their youngest child was 7, which gave some single parents time to gain extra qualifications in order to improve their job prospects which is important as single parents tend to occupy the lowest paid jobs and also the most part-time jobs. The reform means that single-parents who are taking further education courses will have to leave the course if they are offered a job, even if that job is not what they have been training for.

So, this reform pushes single parents into a labour market with few job opportunities, and even fewer family friendly jobs, and comes a full 17 months before more support for childcare costs for single parents working fewer than 16 hours a week becomes available.
Gingerbread is calling for  single parents with children aged five and six who take up further education courses to be treated as fulfilling work search obligations as well as financial help towards childcare costs for those working less than 16 hours a week.

The problem with being a working single-parent (and I speak from personal experience here) is that the cost of childcare is crippling when it's being paid for out of one wage.  I chose to leave my full-time job when I became a single parent and there were several deciding factors involved in that decision, but one of them was the cost of childcare because of the long hours I had been working. It was then that I decided to change career and thought about teaching, not just because of the holidays but if I'm honest I could see how much money I would save in childcare costs. 

More recently there has been a lot of news coverage about the rising cost of childcare in relation to how much people actually earn, and Family Nest have produced a new piece of research which  illustrates the disparity in affordability in different areas of the country and highlighting how the rising cost of childcare in Great Britain is making it increasingly difficult for parents to afford to go back to work. The basis of the research was to identify what proportion of parents’ wages is spent on childcare per year.

The  Childcare Affordability Report was released in June and highlights the most affordable places in Britain to raise a child based on income versus the cost of childcare and it's quite an eye-opener.

The report surveyed 124 local authorities and official earnings data to determine a league table of affordability for every county and town. On average it found that families pay almost a fifth (18.9%) of their earnings on childcare each week, highlighting the extent of the burden of childcare costs for working families.

Family Nest have created a tool that can shows how far income goes in terms of childcare and where the best place in the UK would be for them to raise a child based on this information.

The national picture looks like this:
• Parents who pay for 25 hours of childcare each week can expect to pay £4,993 annually to
cover childcare bills in Great Britain today
• These costs are equivalent to 18.9% of average annual earnings
• This average annual earnings figure takes into account disparities between part time and full
time wages as well as gender differences
• Based on average earnings, a parent would need to work 391 hours each year to meet the
average cost of childcare in Britain
The most affordable locations
• Stoke in the West Midlands is the most affordable urban area in Britain for parents to meet
childcare costs – costs are equivalent to 13.8% of average annual earnings in the area
• The West Midlands is an affordability hotspot with four of the top ten most affordable locations
in the country located in the region (Stoke, Shropshire, Solihull and Dudley). The North West also features prominently with three of the top ten most affordable locations

The least affordable locations
• Ebbw Vale in Gwent, South Wales  was found to be the least affordable location in the measure of care costs relative to average earnings (why is it so expensive there?). A parent would need to spend 28.2% of their average income on meeting costs
• A wide variety of locations feature amongst the least affordable areas. All of the locations have one things in common, a lack of correlation between local earnings and childcare costs