Home Business NewsBusiness Poorest parents pay three times as much on childcare as the richest

Poorest parents pay three times as much on childcare as the richest

by LLB Reporter
21st Jul 22 9:20 am

The poorest parents in Britain must spend three times as much of their income on childcare as the richest households, a think-tank reveals today.  

Today, the Social Market Foundation reveals the extent of childcare poverty in the UK, as it publishes full findings of analysis for a cross-party Commission on Childcare led by Conservative and Labour MPs.

The commissioners, John Penrose MP and Siobhain McDonagh MP, are working with the SMF to analyse the impact of poor childcare provision on wages and poverty, and ways to improve provision.

SMF analysis further shows that a third of the poorest who are using childcare are in ‘childcare poverty’, meaning they spend over 20% of their household income on the service.

SMF analysis of data from the official Family Resources Survey shows that parents from the lowest income group who use formal childcare spend 17% of their net household income on childcare. For parents in the highest income band, the figure is 5% percent. 

While higher-income parents are more like to use formal childcare, many of the poorest parents still face high financial costs for childcare. 52% of parents who have young (0-4 years) children and household incomes of less than £10,000 are paying for some sort of formal childcare.

The findings come at a time of year when childcare needs are peaking, and costs are mounting – Government has recently announced changes to the system that will eventually cut childcare costs. The SMF’s policy paper, to be published in Autumn, is set to provide solutions to the mounting crisis of inadequate childcare provision.

Even though childcare makes up a greater share of their household income, they are getting far fewer hours of the service, the SMF calculated.

The unaffordability of childcare further affects the economy and maintains gender inequality, as SMF’s analysis found childcare costs were the leading reason among mothers of young children to not be in work. Over half (54%) of part-time working mothers who wished to work more also said they needed affordable childcare to increase their hours.

The SMF’s Commission on Childcare is taking evidence from key stakeholders and make recommendations later this year on how to make Britain’s childcare provision work better for families and the economy.

Scott Corfe, SMF Research Director, said:
“Quality, affordable and accessible childcare is vital to social mobility and gender equality. At present, far too many are paying through the nose, and yet not receiving nearly enough of it.

“It is imperative that the childcare market is fixed. Low-income families should not have to spend such a large portion of their income on it, and parents should not have to sacrifice their careers for it.”

“Britain urgently needs solutions to prevent the childcare poverty gap from widening with the cost-of-living crisis, Our new cross-party commission will provide some answers to deliver the high-quality and affordable childcare that Britain needs.

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