Childcare costs push 130,000 children into poverty

June 19, 2015
  • Risk of poverty increases by a third when working parents pay for childcare
  • Pledged support under universal credit won't kick in for at least four years
  • Leading charities urge government to bring forward support under tax credits.

130,000 UK children are pushed into poverty as working parents struggle to pay rising childcare costs, finds new research published by Gingerbread and the Child Poverty Action Group (CPAG) today.

The research, carried out by Loughborough University, also found the risk of poverty increased by a third for children whose parents pay for childcare (from 14.9 to 19.6 per cent)1

Gingerbread and CPAG warn that families struggling to make work pay have a long wait ahead for extra childcare support pledged by government, while costs continue to rise sharply above wages. In the last five years, nursery fees for under-twos have risen by 33 per cent.2 One in five children with at least one working parent is growing up in poverty.3

The government has set out plans to pay up to 85 per cent of childcare costs for low-income families on universal credit from next spring, an increase from the current 70 per cent available through tax credits. But with universal credit’s rollout to families frozen for a year4and full rollout delayed until 2019,5this extra support is years away for many families.

Gingerbread and CPAG are today calling on the Chancellor to ensure that universal credit delays don’t stop poor working families from accessing the 85 per cent of childcare support the government pledged. The charities argue that by introducing the extra support through tax credits, hundreds of thousands of families will be able to start making work pay.

Gingerbread Chief Executive Fiona Weir said:

“Any family knows that childcare is incredibly expensive, but this research proves that the costs are having a very real and damaging effect on the poorest families

“Government proposals will go a long way to helping families with childcare costs – but support is years away from helping many poor families who simply can’t afford to wait.”

Chief Executive of Child Poverty Action Group, Alison Garnham said:

“Despite recent progress, childcare costs still make it hard for low income working families to enter or progress in paid work. And children in these families still face the day to day reality of living in poverty because of it.

“The extra support with childcare costs is needed now so families don’t have to lose out because universal credit is delayed. The Chancellor must act now to make work a route out of poverty and deliver on his government’s pledges.”

It is also unclear when 30 hours of free childcare a week for three and four year olds will be available and the government has indicated that there is much work to be done before it will be available to families.6

The charities’ call comes ahead of the latest child poverty statistics, due to be published on Thursday next week (25 June) and the Budget on 8 July.

ENDS

 

Notes to editors

  • 1. Hirsch, D. and Valadez, L. (2015) How much does the official measure of child poverty under-estimate its extent by failing to take account of childcare costs? Loughborough: Centre for Research in Social Policy.
  • 2. Rutter, R. (2015) Childcare cost survey 2015, London: Family and Childcare Trust
  • 3. DWP (2014) Households below average income (HBAI): 1994/95 to 2012/13
  • 4. DWP update to local authorities: “No sites that are going live as part of 2015/16 national rollout will take claims for couples and/or families.” Source: DWP (2015) Housing Benefit Direct, issue 157
  • 5. December 2019 is the DWP’s planned date for completing the transfer of 93 per cent of claimants on to universal credit. Source: National Audit Office (2014) Universal Credit: progress update
  • 6. David Cameron said it would "take time" to get the policy right. DWP Minister Priti Patel is launching a task force to look at the funding model. Source: BBC News, 1 June 2015. There is no published timetable for rollout. The policy will offer 30 free hours of childcare a week for working parents, 38 weeks of the year, matching school holidays.