Frances O’Grady warns new mothers face “catch-22” with rising childcare costs

Frances O’Grady has warned that new mums are facing a “catch-22” over rapidly rising childcare costs after research revealed that annual childcare fees for children under two have increased by more than £2,000 since 2010.

The analysis by the TUC, published today, found that the average annual nursery bill for a child under two has increased by 44% since the Conservatives took office – from £4,992 in 2010 to £7,212 last year.

The TUC general secretary said: “Childcare should be affordable for all. But parents are spending a massive chunk of their pay packets on childcare bills, while their wages stagnate. This is putting huge pressure on family budgets at the same time as other living costs are shooting up.

“New mums are caught in a catch-22. The UK’s miserly rate of statutory maternity pay means many are under financial pressure to return [to] work early and are then at the mercy of sky-high childcare fees. We urgently need to get wages rising to stop households drowning in bills.”

Statutory maternity pay has fallen by 3% in real terms since 2010 – equivalent to a loss of £5 per week. The TUC highlighted that mums only receive statutory maternity pay for 39 weeks, meaning if they take the full statutory maternity leave of 52 weeks, they are unpaid for the final 13.

The Organisation for Economic Co-operation and Development (OECD) found that the UK has the second highest childcare costs among leading economies. A TUC poll in March revealed that 32% of working parents with pre-school children spend more than a third of their wages on childcare.

The TUC is demanding urgent investment in the childcare sector to improve wages for childcare workers. The organisation is also calling for a longer-term funding settlement to ensure childcare is “affordable and available” for families.

The government is considering relaxing rules on the required ratio of nursery staff to children as a way of bringing down childcare costs. Childcare providers for under two-year-olds could be allowed to have a ratio of four children to every staff member, up from a current cap of three.

The TUC has argued that the plans would damage the quality of childcare services and has raised concerns about whether the reduced costs for childcare providers would be passed on to parents.

O’Grady said: “Cutting staffing ratios is the last thing we need. It would just put more pressure on underpaid and undervalued childcare workers. We need a proper funding settlement for early-years childcare that delivers decent pay and conditions for the workforce and high-quality care.”

The TUC’s analysis is based on data from the charity Coram Family and Childcare. Managing director Ellen Broome said: “Coram Family and Childcare supports the TUC’s call to make childcare affordable and available for all families.

“Good-quality, affordable childcare is key social infrastructure that both supports economic recovery and boosts children’s development while narrowing the attainment gap. Universal Credit should be reformed so that parents, especially mothers, are not locked out of work or left financially worse off by working.

“Families are facing ever-rising childcare costs and many are under intense financial pressure. We want the government to re-allocate the billions of pounds in underspend from the tax-free childcare scheme to ease the burden on low-income families.”