Childcare cost rises 'may make parents quit their jobs'

Toddlers can go to a variety of nursery settings

Some parents could be forced out of work and into poverty as the rising cost of childcare outstrips wage rises, says a report.

A survey by the Daycare Trust charity showed that the average cost of nursery care in Britain for children under two rose by nearly 6% last year.

Average wages rose by just 0.3%.

The government said it was investing an extra £300m to help families with childcare costs and increasing places in free early years education.

The figures, published in the Daycare Trust's annual survey of childcare prices, also show the costs of child minders and of nurseries for children over two rose by nearly 4%.

The report also highlights the impact of the government's recent limits on the tax credits which lower-paid parents can claim to pay for childcare.

Analysis of government figures for last year show that 44,000 fewer families are receiving this help - while those who still get it receive an average of £500 a year less, says the report.

This year's survey finds the average cost of a part-time nursery place for a child under two is more than £100 a week or £5,000 a year, with significant regional variations.

Nurseries in London and south-east England were most expensive, with a top price of £300 a week for a part-time place.

"These above-inflation increases in the cost of childcare are more bad news for families, heaping further pressure on their stretched budgets," said Anand Shukla, Daycare Trust's chief executive.

He said his group warned that "the government's decision to cut tax credits would mean some families found they were no longer better off going to work once they had paid for childcare".

"The figures reinforce Daycare Trust's fear that the loss of this vital lifeline is forcing families out of work and into poverty," he added.

The survey also found a shortage of childcare in some areas, particularly for disabled children.

Flexible working

The Trust wants the government to boost the value of childcare tax credits to the poorest families and to commit itself to free nursery education to all two, three and four-year-olds by 2015.

It also says employers should be encouraged to offer flexible working and childcare vouchers and local authorities should prioritise childcare in their budgetary planning.

The National Day Nurseries Association (NDNA) said it was crucial to remember that nurseries faced the same rising costs as families and that good quality childcare was not cheap.

Purnima Tanuku, NDNA chief executive, said parents should use all the financial support available to them, including the 15 hours of free early education which is currently open to all three and four-year-olds.

Ms Tanuku called on the government to ensure that the free hours were fully funded so that nurseries did not make up the shortfall by raising the costs of paid-for hours.

'Fair start'

The Local Government Association said councils were doing all they could to run affordable, high quality childcare services in the face of cuts in their grants from central government.

Children's Minister Sarah Teather said the government was "determined to help" and the coalition was putting more money into early years and nursery education than ever before.

"Every three and four-year-old can already claim 15 hours of free early years education a week. But we want to go even further - so will extend these free places to around 40% of two-year-olds as well," she said.

"We're also investing an additional £300m to help families with childcare costs while they look for work, and will maintain the duty on councils to make sure there is sufficient childcare available for local parents.

"These measures will help parents and, most importantly, make sure even more children get a fair start in life."