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Subsidised childcare scheme sends private nursery costs rocketing, with teachers and nurses “outpriced” (19 February 2015)

Date: 19/02/2015
Duncan Lewis, Child Care Solicitors, Subsidised childcare scheme sends private nursery costs rocketing, with teachers and nurses “outpriced”

A government scheme which enables low-income families access to 15 hours of free childcare a week has had a negative impact on other families accessing affordable childcare because of a shortage in nursery places.

The Daily Mail reports that under childcare reforms introduced by Deputy Prime Minister Nick Clegg, around 260,000 families on low incomes now have free childcare for part of the working week.

However, childcare costs for families on middle incomes have soared to £6,000 a year as a result of a shortage in nursery places fuelling childcare fees at private nurseries.

The subsidised nursery scheme was introduced by the Deputy Prime Minister to help give young children from disadvantaged backgrounds a better start in life.

However, a study by the Family and Childcare Trust suggests that spiralling costs for families on middle incomes may mean that “it simply does not pay to work” for some families.

The independent charity found that childcare costs have risen by one-third in the last five years and since the coalition government came to power in 2010.

There are fears that middle income earners such as teachers and nurses may find they are unable to afford the average annual costs of £6,000 for childcare – and may opt out of the labour market altogether.

Author of the report for the Family and Childcare Trust, Jill Rutter, said:

“A lot of providers argue that funding for free early education for two- to four-year-olds is not enough, so they charge working parents more money above the rates for free early education to cross-subsidise that provision.

”In some areas, prices have gone up a lot – it has become very hard.

“Teachers and nurses are being priced out of the labour market in London and the southeast, as it’s not worth their while going back to work.”

However, the Deputy Prime Minister is expected to repeat his pledge to offer all working parents 15 hours of free childcare for children aged nine months to two years.

The report found that, despite heavy government funding on the subsidised childcare policy, the impact on private provision for childcare has had serious financial implications for families, with 25 hours at a private nursery for a child aged under two years now costing an average of £115.45 a week – £6,003 a year.

In 2010, when the coalition government came to power, the cost of childcare was an average of £86.54 a week.

The Liberal Democrats claimed that the government subsidised childcare scheme would save families on low incomes £2,600 every year.

Data for the report was collected from local council and family or children’s information services in England, Wales and Scotland.

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