5 min read

Affordable childcare?

There has been more than one occasion when the government has queried whether benefit payments should be localised. This would mean that those living in areas with a lower cost of living automatically receive less than those in the South East, for example.

A toddler plays in a soft play area.

Cost of living varies by region

Regionalisation of welfare is one ideas the government is discussing in a bid to reduce the welfare bill and national deficit. Whether it proves a palatable change or a political hot-potato remains to be seen. However, it has highlighted the variations in the cost of living across the UK.

Salaries, house prices, rents, travel expenses, the incomes and outgoings of families vary considerably depending on where you live. This has been highlighted in a report published by Family Investments.

Local authority survey

The report surveyed 124 local authorities and official earnings data to determine a league table of childcare 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. This highlights the extent of the burden of childcare costs for working families.

There was good news for those living in Stoke, deemed the most affordable place in Great Britain for childcare. The West Midlands, also turned out to be an affordability hotspot with four of the ten most cost-effective urban areas in the region.

But for others, the data shows what they already know: that childcare is a substantial outgoing. Ebbw Vale in South Wales won the unenviable accolade of being the area where childcare costs relative to earnings was the highest. There childcare costs (based on a parent paying for 25 hours a week of care) were the equivalent of 28.2% of earnings at £5,539 a year. This compares with 13.7% or £2,925 a year for a parent in Stoke.

“For many parents childcare costs are almost as much of a burden as their mortgage or rent and this can put families under financial strain.”

For many families this is a cost that comes out of their taxed income. Unless they are lucky enough to work for an employer signed up to the childcare voucher scheme.

Childcare costs – a large expenditure

Childcare costs are an inherent expense for most families – according to the most recent census data 77% of all UK parents are working. These figures show just how large a proportion of their income has to be spent on it. This can put families under considerable financial strain. It’s not surprising that ‘we can’t afford another child’ is a familiar cry from parents after their first born.

This report comes as valuable information for parents. Especially at a time when the government puts so much focus on getting women back in work. However, there is little provision for flexible working and affordable childcare options. The findings are particularly interesting as they do not fall into the classic North/South divide. There are two London boroughs in the top ten – or should that be bottom ten – urban areas ranked least affordable. There are also two in Wales, two in the North East and the rest are scattered across the UK.

It really does show the complexity of factors that affect affordability. This report may offer little solace for hard-pressed working families, it does offer genuine insight into regional variations.

Note: Whilst we take care to ensure Talking Finance content is accurate at the time of publication, individual circumstances can differ so please don’t rely on it when making financial decisions.