Cut The Costs Of Childcare

The cost of childcare rose at more than double the rate of inflation this year. Are you claiming all the help you're entitled to?

The Daycare Trust has just released its 2008 Childcare Costs Survey, and it makes for worrying reading. The report, which examines the costs of nurseries, childminders and out-of-school clubs has revealed that, yet again, the costs of sending a child to day care has risen at a rate far exceeding the rate of inflation.

Indeed, in England this cost of sending a two-year-old to a typical nursery has increased at a rate of more than double inflation (around five per cent), while in Wales it has risen at a rate of nearly four times inflation (a whopping eight per cent).

Looking at some actual figures, the average cost of a full-time nursery place for a child under two in England is £159 per week, rising to £202 in London and the South East. A childminder will cost around £144. In Wales, the average nursery cost is £141 per week, with childminders costing more, at £153 per week. When compared to the fact that average earnings are £457 per week, you can see just how expensive childcare is.

In fact, the only place to have shown a decrease in their childcare costs is Scotland, where prices have fallen by an average of three per cent to £141 for a nursery place for a child under two, and £139 for a childminder.

Parents are bound to be feeling the sting of these rises, particularly as so many companies have been giving so-called "cost of living" pay rises, which are usually around the rate of inflation (2.1 per cent). Add on rising energy costs, petrol and diesel, food bills and mortgage rates and you can see how much of our disposable income is being eaten up each month.

What's more, one of the biggest rises observed by the Daycare Trust concerns after-school clubs. These schemes, designed to help working parents with school age children, have raised their costs by six times the rate of inflation, with typical costs of £43 for 15 hours a week. When you realise that single parents with a youngest child of 12 or older  are expected to be working, or available for work come October this year, you can see how much of their income could be taken up by childcare.

So what can we do?

The UK's childcare costs are shockingly high compared to the rest of Europe and infuriatingly, and while on the one hand the government is trying to persuade parents to combine working with bringing up a family, it hasn't created a great number of ways to help. Here are some of the schemes parents should be taking advantage of, if possible.

Tax Credits

If your family income is below £58,175 per year (£66,350 if you have a child under one) you may be able to claim Child Tax Credits or Working Tax Credits. It's estimated that nine out of ten families are entitled to claim, which provide help with childcare costs.

Free Part-Time Early Years Places

This scheme is available to all three and four-year-olds and gives up to 12.5 hours (increasing to 15 hours in 2010) of childcare for free, for 38 weeks of the year.

Childcare Vouchers Scheme

Many employers have now signed up to the Childcare Vouchers scheme, which allows parents to sacrifice some of their gross salary in return for "vouchers" that can be used to pay for childcare. The first £55 each week (£243 each month) can be bought free of tax or national Insurance, meaning a lower rate taxpayer could save around £962 per year, and a higher rate taxpayer around £1,195.

Most companies can join the scheme and, so if you haven't already, it could be well worth asking to see if yours has signed up with one of the voucher providers. However, if you are able to claim benefits, you may find the Childcare voucher scheme affects these, so find out before signing up.

And of course, many larger companies offer their staff subsidised on-site crèche facilities, although these may be few and far between.

The Daycare Trust has called upon the government to additionally offer the free early education places to two-year-olds, as well as increase the number of hours per week to 20, as well as to subsidise after-school activities for 11-14 year olds from, lower income families, eventually making them free. Let's hope the government starts to listen. But in the meantime, if you have children and are working or would like to go back to work, check out what you're entitled to and claim if you can.

More: DirectGov Childcare website