Poorest areas hit hardest by escalating childcare costs

Child trust fund provider calls for government action as report reveals stark regional disparities

Families in many of the poorest areas in Britain are being forced to spend more than a quarter of their incomes on childcare, a report has revealed.

In Britain today, a parent paying for 25 hours of care a week can expect to pay £4,993 a year, equivalent to 18.9 per cent of average earnings.

But in Ebbw Vale, south Wales, care costs equate to 28.2 per cent of a parent's earnings or £5,539 a year. In Wembley, north-west London, care costs £7,048 a year − or 26.7 per cent of a parent's income. In Newcastle, north-east England, parents face bills of £5,923 a year or 26.6 per cent of earnings. Following close behind is Hackney, in east London, where bills of £7,626 a year take up 24 per cent of a parent's income.

The high cost of childcare has become a hot political issue, with charities warning that many parents could be forced out of work and on to benefits because they cannot afford to meet spiralling childcare costs. Earlier this month David Cameron announced the launch of a new government commission to look at how to cut the cost of childcare.

Kate Moore, head of savings and investments at Family Investments, which carried out the study, said: "Childcare has emerged as an important policy issue in recent months, but the debate so far has focused on the national picture. The lack of correlation between local earnings and childcare costs highlighted in our report is stark. We urge those currently looking at childcare provision to investigate this disparity and identify whether more needs to be done to encourage greater provision, competition and greater affordability of care.

"At a time when the overall financial burden parents face is increasing, employment should allow them to save towards the future and provide for costs such as higher education. It is only reasonable that care costs are fair and allow parents to achieve this."

Stoke in the West Midlands was found to be the most affordable urban area − 25 hours of care a week in the region costs just 13.7 per cent of a parent's income − or £2,925 over the course of the year.

The West Midlands was found to be the best area for childcare affordability. Four of the 10 most affordable urban areas are located in the region. North-west England also featured three of the most affordable locations in the top 10, with Bolton ranked third overall. Neath in West Glamorgan is the most affordable location in Wales. While Scotland did not feature in the top 10, Galashiels in the Borders ranked 12th overall, with a parent needing to set aside 16.5 per cent of their earnings to cover care costs.