Childcare in Britain: Parents paying an unsustainable price for care

Cuts and a postcode lottery exact a heavy toll

Britain is facing a childcare crisis with fewer than half of all councils able to provide adequate help for working parents, a damning report will reveal this week. As childcare costs reach an all-time high, just 46 per cent of local authorities in England have facilities to support all parents working full time. In Wales, the picture is bleaker, with just 17 per cent offering enough state-funded daycare. In Scotland, only 21 per cent do.

The findings from the Daycare Trust expose how deep cuts to services are forcing many families to cover the costs of nursery, children's centres and after-school clubs through private means. The average annual cost of childcare for a child under two years old is now more than £5,000.

They also cast doubt on Nick Clegg's pledge to provide free childcare to 40 per cent of all two-year-olds by 2014 and add pressure on Sarah Teather, the Children and Families minister, who is already facing anger from parents over service cuts. A cross-party group of MPs will question her on Wednesday, asking why the Government is not doing more to help parents who face a postcode lottery in provision and the most expensive childcare bills in Europe.

Britain's woeful provision of childcare has prompted George Osborne, the Chancellor, to look at ways to use any spare money to bring down costs, and the issue is likely to dominate his Budget next month.

In response to the crisis in childcare, the Labour Party will conduct its own audit of availability and affordability across the country to identify gaps. Stephen Twigg, the Shadow Education Secretary, says parents now face a "killer combination" of reduced, expensive services and more pressure to work because of the economic downturn.

A report by the All-Party Parliamentary Group on Sure Start, seen by The Independent on Sunday, says the Government should consider sanctions for councils that fail to meet their legal requirement to provide adequate childcare. The APPG says that, in some cases, once-a-week playgroups are being presented as replacements for full-time children's centres.

Despite setting ambitious targets on care for pre-school children, the Government has removed ring-fenced funding from Sure Start and allowed local councils to determine how much is spent on children's services. In some areas, this has resulted in drastic cuts to the number and quality of childcare centres.

More than half (51 per cent) of local authorities do not believe they will be able to meet the Government's target of providing free childcare to 40 per cent of all two-year-olds by 2014, according to the Daycare Trust.

Tomorrow night, a Panorama documentary will look at the escalating costs and diminishing availability of Britain's daycare services. The Cost of Raising Britain will examine those who have moved abroad in search of a better deal and how some parents are being forced to consider taking over their own nurseries.

Parents in the UK now spend an average of a third of their income on childcare. In countries such as Denmark and Sweden, heavy government subsidies mean childcare is kept at under 10 per cent of parents' income.

Lack of affordable childcare is seen as a contributing factor to high levels of unemployment, and studies have suggested the net long-term benefit to the Treasury of universal childcare for one- to five-year-olds could be as much as £40bn over 65 years.

According to Stephen Twigg: "As a country, we want to use all the talent that's available to us and if a parent is unavailable because they can't get proper childcare, they're unavailable to the country... Early-years [education] and childcare are examples where sensible investment brings cost savings later in life. Parents are facing a killer combination of the economic situation, rising childcare costs and the reduction in services."

The situation is hardest for parents with different needs from the norm. For example, only 12 per cent of local authorities in England provide adequate childcare for all parents working atypical hours. For parents of disabled children, the proportion of councils able to provide enough help is also just 12 per cent.

The Sure Start APPG report said that MPs were "very concerned over the lack of clarity and uncertainty about the future of Sure Start children's centres in some areas". MPs noted that if they struggled to get an answer from local councils about what services were available, parents were likely to face an even more uphill battle.

The group also found that "lessons had not been learnt" by local authorities that were threatening centres with closure or cutting them back so they no longer offered proper care.

In England and Wales, councils have a legal obligation under the 2006 Childcare Act to meet the needs of parents working full time. These latest studies suggest they are far from meeting those requirements.

Anne Longfield, chief executive of the charity 4Children, which acts as secretariat to the APPG, said: "Families are in fear of a crisis in their childcare. A lot of families tell of real turmoil in their childcare that is having hard-hitting consequences in their own lives.

"There's no guarantee for families that childcare will be available. While many families have taken the leap and are both working and needing childcare, services haven't caught up with what they need."

Sarah Teather said: "The cost of childcare is one of parents' top concerns. We are determined to help. At a time when money is tight, the coalition government is prioritising this area and 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 per cent of two-year-olds as well."

Case studies...

Lee Horscroft, 35, Braintree, Essex

Lee gave up working as an electrician to look after his son, Rhys, two

"I took custody of my son in February last year when I worked full time. But even at a Sure Start centre it would have worked out at £550 a month. I just couldn't afford it. The more I looked into it, the more beneficial it seemed to Rhys to leave my job and look after him myself. I've always supported myself and my family; to give all that up and go on benefits made me feel worthless."

Rachel Binnie, 39, Manchester

IT workers Rachel and husband Steve Binnie, 46, from Manchester, rely on Rachel's mother to keep down childcare costs for Zane, six, and Dexter, three

"I do two longer days at work so I can get a day off a week and my husband works full time. My mum helps out two days a week. I've given up my car and changed to public transport to save money. My youngest, Dexter, is in a Sure Start centre. It costs more than £300 a month for three days a week, and that's cheap compared to private. But the Sure Start centres in Manchester are all being phased out now."

Ruth Walsh, London

Student Ruth, in her forties, from London, used to get help from Sure Start with her son, Billy, two

"I suffer from severe depression and have a spinal injury so I was given extra help from the outreach worker at my local Sure Start centre. Since the cuts, there's only one member of staff there now and they don't have the time to help. The Sure Start model has been taken apart and there are no home visits now. I have struggled as a single parent with my injury and mental health, and I wouldn't have got back on my feet without the outreach worker."

Knut Bye, 44, Norway

Consultant Knut and academic Lisa Whitehead, 37, moved to Kristiansand, Norway, last year with their daughter, Thea, four

"Until last year, we were living in Huddersfield. Thea was in nursery for three days a week and we paid more than £400 a month. Lisa was working part time and, with a mortgage and student loans, it was difficult to make ends meet – we weren't badly paid but we'd get to the end of the month and have no money. In Norway, full-time nursery provision costs £200 a month and salaries are higher."

Number crunching: Why a universal system makes economic sense

Parents in the UK face the highest childcare costs in Europe, spending, on average, a third of their income on fees. So is there a better solution?

If it provided universal childcare for pre-school-age children, the Government could make more than £20,000 for every mother returning to full-time work after one year of maternity leave, according to the Institute for Public Policy Research. The think tank suggests that, once you take off the childcare costs, the Treasury could still take back £20,050 in taxes over a four-year period.

By getting more parents working, and improving the productivity of children through teaching them from an earlier age, experts argue that subsidised childcare can boost government coffers. Funding universal childcare for all one- to four-year-olds would result in a net profit for the Government of £40bn over a 65-year period, according to a report in 2003 by the Social Market Foundation, Daycare Trust and PricewaterhouseCoopers.

The proportion of income spent by British parents is three times that paid by French families and more than four times that spent by parents in Denmark and Sweden.

Some 33 per cent of under-threes are in formal childcare in the UK – lower than Spain, Belgium, the Netherlands, and Denmark.