Are UK childcare costs really the most expensive in the world?

//Are UK childcare costs really the most expensive in the world?

Are UK childcare costs really the most expensive in the world?

By Felicity Anderson

This week the BBC examined figures from the international economic body, the OECD, which show the UK has the highest childcare costs in the world.

The figures, from 2015, were used by campaigner Joeli Brearley to claim that UK parents are paying more for sending their children to nursery compared to other countries.

Following interrogation of the data, however, it emerged that the statistics apply to certain demographics only and that the research is based purely on families in England.

It also fails to account for changes in government policy since September, which have provided most working parents in England access to 30 hours of free childcare per week for three and four-year-olds.

What do the statistics tell us?

Look at the data and it’s easy to assume that the UK is way out front when it comes to costs for sending children to nursery- yet it’s important to dig a little deeper.

The typical ‘two-earner couple,’ that the data is based on, assumes both parents are in full-time employment, where one parent earns an average wage and the second parent earns 67% of average earnings.

While this information looks like unwelcome news for higher earners, remember that it was collated before September 2017.

The government has since introduced 30 hours of free childcare a week for three and four-year-olds for working families, like the ones featured in this data.

The Department of Education says that 202,783 children in England benefited from the policy and that families could save £5,000 per year on childcare costs

What about lower income families?

Are UK childcare costs really the most expensive in the world?

Many parents in the UK earn far less than the parents included in the data as they are single parents, working part-time or earning below the average wage.

These lower-income families are eligible for working tax credits and other forms of financial assistance to help cover the majority childcare costs.

Speaking to the BBC Mike Brewer, an economics professor from the University of Essex, says that the childcare element of the working tax credit (which is being replaced by universal credit) is heavily means-tested and “very generous to low-paid families” relative to other countries.

Under the childcare element of universal credit, parents in the UK can receive up to 85% of childcare costs.

The figures below, are based on these types of lower-income families, highlighting rather a different picture, with the UK coming at number eight, well behind Ireland and the United States.

 

Recent developments in childcare costs in the UK

Alongside recent changes to childcare provision, described above, this week saw the widening of the Tax-Free Childcare scheme to include care for kids of between nine and twelve.

The scheme was launched in April last year for those with children that were aged under four and then extended to parents of kids aged four and five.

You can get up to £500 every three months (£2,000 a year) for each of your children to help with the costs of childcare.

If you get Tax-Free Childcare, the government will pay £2 for every £8 you pay your (approved) childcare provider via an online account.

Lizz Tuss, chief secretary to the Treasury, said: “Tax-Free Childcare will cut thousands of pounds from childcare bills and is good news for working parents.”

 

By | 2018-05-30T10:08:54+00:00 February 15th, 2018|Personal Finance|0 Comments

About the Author:

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Felicity is a passionate advocate of simple living. Based in Scotland she was once a crime reporter, before moving on to obtain her degree in History. Felicity now focuses on business and financial journalism.

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