Childcare costs pushing parents into debt
Most mums who are on middle to low incomes can't afford to return to work due to the cost of childcare.
With unemployment hitting levels not seen in seventeen years, it’s worth remembering one big issue which is holding back many women of working age from re-entering the world of employment – childcare costs.
Nursery costs for children under two range from an average of £5,028 a year for 25 hours a week up to £14,300 a year for the most expensive nursery (based on £11 an hour), according to research last year from the national childcare charity the Daycare Trust and Save The Children.
These figures are peanuts if you are a high flying City executive like, say, Nicola Horlick - dubbed “Superwoman” in the 1990s for balancing her City career with bringing up six children - but not if you are a basic rate taxpaying mum or earning a low income.
For some middle-income households, the cumulative costs of train season tickets, childcare costs and daily subsistence in expensive cities like London mean that it is simply uneconomical for a mum to return to work. The Social Market Foundation think tank points out that 10% of mums with children under the age of three chose to stay at home due to childcare costs.
Voucher schemes
However, it is not all bad news. Some larger companies offer generous childcare voucher schemes which enable working parents to save on their childcare costs, if they choose to return to work.
What’s more, taking advantage of these schemes can actually lower your tax bill. Employees can sacrifice part of their salary to purchase the vouchers in order to pay for registered or approved childcare, and as a result save on income tax and national insurance.
For more on childcare vouchers, check out this article.
Childcare as expensive as a mortgage
Research found that choosing to stay at home was a common occurrence for low income families along with turning down jobs or considering leaving work because they couldn’t afford to pay for childcare.
Save the Children and Daycare Trust highlighted that parents in Britain spend almost a third of their incomes on childcare, more than anywhere else in the world. The costs of childcare are on a par with 41% of families’ mortgage or rent payments.
And shockingly, despite many parents cutting back their spending, almost a quarter have got into debt because of childcare costs.
Government help
If childcare costs are a problem for new or experienced mums, should they not turn to friends, neighbours or family to do the babysitting? This would cost nothing. Well, it is not as simple as that. Some mums don’t have the luxury of reliable parents or strong community spirit to fall back on due to circumstance.
So should the coalition Government be doing more to help with childcare costs?
Yes it should, but sadly, at the moment, it is not. According to a report published last November by the Social Market Foundation (entitled The Parent Trap: Illustrating the growing costs of childcare), parents have been hit by the cuts to childcare support in the tax credit system, and the freeze in the value of childcare vouchers.
Ryan Shorthouse and Ian Mulheirn co- authors of this report, called on the Government to means-test child benefit and also to rethink how childcare is viewed.
Save the Children and Daycare Trust are asking the Government to increase the amount it plans to spend on childcare support under the new Universal Credit (to pay up to 80% of childcare costs for low income families up to the current weekly maximum) “in a bid to prevent low income families from being priced out of work into poverty”.
At the moment if you’re working and you’re on a low income you might be eligible to get Working Tax Credit, but there are limits on the weekly costs you can claim. According to the DirectGov website, if you pay childcare for one child, the maximum you can claim is £175 a week; for two or more children, the maximum is £300 a week.
To work out whether you are eligible for tax credits, fill out this section of the HM Revenue & Customs website.
More help ahead?
There could be light at the end of the tunnel though. Last week Chancellor George Osborne announced the Government might be reviewing child benefit for middle income families, details of which will be announced in his forthcoming Budget in March.
Help from the Government is definitely needed if more mums are to return to work. Employers should also share the burden of childcare costs and flexible working, so mums have peace of mind, knowing that their child is being looked after while they are working.
What do you think? Should the Government offer more help to encourage women back into work? Let us know your views via the comment box below.
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Comments
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@exportlink88: again, it only appears expensive to you because you can't get any of the subsidies that apply for lower-end earners. The cost of childcare can be much higher in other countries, but it appears lower because the state automatically subsidises it.
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@ superbrain. From experience, the one who goes to work probably has the easier life because bosses are limited by law as to what they can do. The one who stays at home has the more gruelling life because infants and children can be totally irrational, and downright draining. Then again, I've never considered being a mother or housewife an easy chore. As you rightly put it, those who stay at home and keep home often work very long hours for little reward, and the hours are diabolical. I live with my elderly mother, and while she cooks my evening meal each weekday night, when it comes to the weekend, she hangs up her oven gloves and I take over the chores. If we cannot share the responsibility of cooking and cleaning, then there is no basis for an even relationship. I have worked with men who are chauvinist, who expect their meal to be on the table when they get home, then expect their woman to do the washing up while they head on down to the local pub. My regard for them is little. On the flip side of the coin, there are more and more men who are able to turn their hands to cooking and cleaning, and think nothing of helping with the chores when they get home, and as a reward, they and their partner both head off down to the local, to chill out before starting another day.
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Would Sabuhi Mir & other writers stop misusing the term "working mother(s)?" Mothers who stay at home to look after their children most certainly work - they just don't get paid for it. There are sound reasons for the State to help mothers financially, but none for favouring those in paid employment over their poorer sisters.
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05 September 2013