According to research by Save the Children and Daycare Trust, the recent cut in the amount of support parents can get towards childcare costs through Working Tax Credit is pricing parents out of work. Parents in low paid jobs are particularly affected, with 41% of parents earning less than £12,000 affected by the cut saying they would consider giving up work.

This is based on the findings of a survey of over 4000 parents carried out by Save the Children Daycare Trust (as I reported on this blog in May). The survey looked at the impact of childcare costs on families and the work prospects of parents in the UK.

The results published in “Making work pay – the childcare trap” show that the rising costs of living coupled with stagnant wage increases and spiralling childcare costs is having a big impact on the quality of family life, especially for the poorest families. One of the major reasons for this has been the government’s decision to reduce childcare support through Working Tax Credit from 80% to 70%, resulting in an average of £560 being added to the bill of low to middle income working families.

There is a growing evidence base that childcare costs are having significant impact on whether work really pays for parents. The survey also found that:

• A quarter of parents with incomes less than £12,000 have given up work and a third have turned down a job mainly because of high childcare costs – more than twice as likely as better off parents.
• Of those parents with incomes below £12,000 and currently in paid employment the majority (80%) agreed with the statement  “Once I have paid for childcare, I am in a similar position to as if I was not working”.
• The majority of parents with incomes below £12,000 (61%) said they were struggling to pay for childcare compared to around a third of parents on higher incomes (37%).
• 26% of parents with incomes below £12,000 have been unable to take up education or training because of high childcare costs.
• 63% of parents, regardless of income, say they can’t afford not to work but struggle to pay for childcare
•  A quarter of parents, regardless of incomes, said the cost of childcare has caused them to get into debt.

The findings come at a time when the Government’s attempt to ‘make work pay’ through the introduction on Universal Credit (which will replace out-of-work benefits and tax credits from 2013 onwards) is being undermined by a lack of funding for support with childcare costs. The Government wants to transfer the existing, recently cut, childcare funding over to the new Universal Credit system but spread the money over a greater number of parents. It is crucial that the Government finds the extra money needed to ensure that parents receive support with up to at least 80% of childcare costs (up to current weekly maximums) so that work stacks up for low to middle income families.

Take action now with Save the Children’s Affordable Childcare campaign.

The Government has yet to set out how support with childcare costs will work under Universal Credit. However, support is likely to be based on the current childcare ‘funding envelope’ but spread over a greater number of parents. We already know that current support isn’t enough. Support will be spread too thinly without extra funding, with some parents finding they’re priced out of the jobs market by high childcare costs.  

So we want to know what impact the rising cost of childcare is having on families – from forcing them to cut back on household essentials, to making it difficult for parents – especially those on the lowest incomes -  to find or keep jobs. We hope to reach 70,000 parents with our  survey. We would urge readers to publicise the survey which takes just five minutes to fill out online at www.savethechildren.org.uk/childcare We’ll be closing the survey early June.

Not only are low income families facing mounting prices, they must now also contend with the government’s cut to the childcare element of working tax credit – a cut that runs counter to the Coalition’s aim of boosting employment. We hope that the survey results will bring home to government the impact high childcare costs are having  on  families, so that they reconsider this recent cut and increase the childcare funding  available  for  the new Universal Credit.