Women won’t benefit from flexible working until childcare costs fall

For many families it makes more financial sense for one parent to give up work, rather than pay colossal fees

The average full-time childcare place costs around £14,000 a year – no wonder people are struggling (iStock)

Trillions of US dollars were set officially aside this week to help boost the post-Covid economy by lowering childcare costs. Just like they are in the US, childcare fees are one of the biggest expenses for UK parents or carers with young children.

Childcare costs are up 2 per cent in the past year, to an average of £263 a week for a full-time place and £138 a week for part-time care, according to the Money Advice Service.

That’s around £14,000 a year for just one child in full-time care, although the costs vary hugely across the country.

With average earnings of £585 a week for adults in the UK, according to the Office for National Statistics (ONS), and salaries among employed parents hit especially hard during the pandemic, childcare fees account for almost 40 per cent of that income.

With the numbers simply not adding up and parents facing an ongoing dilemma over work and income versus affordability and worth, the problem is now so significant that it is threatening economic recovery. 

And not just here. In the US, where working parents have been weighing up similar dilemmas, a new package of support including subsidised childcare funded by tax increases has been announced as part of president Joe Biden’s “American Families Plan”.

However, childcare costs in the UK have been noticeably distant from the government’s proposals, despite things slowly opening again and children now back at school.

The government and several large UK firms have been promoting the idea of flexible working to help parents, and women in particular, enter and stay in the workforce longer.

Many firms are now looking into introducing flexible working on a permanent basis. Over the past year millions of workers have abandoned offices and set up shop in their homes, and this has forced companies to reevaluate how they work.

Flexible working has long been campaigned for by charities and organisations involved with childcare costs because women tend to reduce their hours or leave jobs completely when they have young children due to the high costs of childcare and the fact they tend to earn less than men.

But the ability to work flexibly from home means it’s much easier for a parent to drop off and pick up a child from a childcare setting or school and to work around these hours without having to give up their job or put their career on hold.

The minister for women and equalities, Liz Truss, has already called for employers to make flexible working a standard option for employees, in part to boost opportunities for women who the government says are twice as likely to work remotely.

Now the Association of British Insurers (ABI) has joined a growing list of trade bodies to formally announce a move to flexible working, signed by 27 of the country’s biggest insurers and financial services firms, promoting flexible working hours for employees.

However, while the move to flexible working can only be a good thing, there are other barriers in place for women, including childcare fees.

Joeli Brearley, chief executive officer and founder of Pregnant Then Screwed, comments: “Almost two-thirds of those that return to work either work fewer hours, change jobs or stop working due to the high cost of childcare.

“Unfortunately, when it comes to childcare, our government is too focused on the initial cost and so they cut corners resulting in a childcare sector that is on the brink of collapse. The thing is, it’s not just the children who benefit from this support, the economy does too. For every £1 our government invests in childcare, we get £3 back. Childcare is an investment, not a cost.”

Until a child turns three in the UK, most parents don’t qualify for free childcare hours and must therefore pay full childcare fees if they return to work.

At this point most people can claim up to 15 hours a week of free childcare (30 in England for working parents who meet the criteria).

Along with support for those on low incomes or receiving benefits, including free childcare hours for two-year-olds, there’s also child benefit which pays £21.15 per week for your first child and £14 for additional children until they turn 16 (for those eligible).

Meanwhile, the tax-free childcare scheme benefits some parents and carers, and you can claim up to £2,000 a year, per child, until they turn 11, or 16 if they have disabilities.   

Felicia Willow, chief executive of the Fawcett Society, adds: "When it comes to childcare, parents in the UK pay more than parents in every other country bar New Zealand.

“The result is that for too many families it makes more financial sense for one parent to give up work, as they simply do not earn enough to cover childcare costs.

“And as mothers are often the lower earner in the couple – and because of lasting gender norms about who is responsible for childcare – it is more often than not mothers who drop out of the workforce.”