Childcare costs wiping out more than half of salaries

Childcare costs are wiping out more than half of salaries: in some cases, 55% of what parents earn is being spent on childcare, according to new research.

Perhaps unsurprisingly, London is the most expensive place to pay for childcare. In the capital childcare costs average £1,383 a month. That’s almost £600 a month more than in Glasgow (where parents pay the least, with a full-time place for a child under two coming in at £799), says a new study.

Liverpool was the next cheapest (though ‘least expensive’ might be more appropriate)  after Glasgow, at an average of £860 a month and Plymouth at £884. Meanwhile, average childcare fees in Bristol tot up to £1,142 and Southampton to £1,050 making them the second and third most expensive cities, the research found.

The investigation also found that a parent could be spending between 41% and 56% of their net wages covering childcare costs, leaving them an average of £1117 a month to cover mortgage or rent, council tax and household bills, groceries, transport and other costs associated with raising a child.

Earnings v childcare costs

It means that for couples who are both going out to work, more than a quarter of their joint income might need to be set aside each month for childcare, says the study by Admiral Loans. For single parents, more than half of their earnings could be lost before they’ve even begun to pay for necessities and other bills.

In London, Cambridge, Southampton, Bristol and Newcastle, an average worker would not earn enough to cover both full-time nursery costs for one child and average mortgage payments. This means families, particularly those with single parents, could be at risk of falling into debt if they want to continue with their careers past parenthood, or else be forced to stay at home because it is not financially viable.

And for those who want to expand their family, putting two children into full-time nursery would mean a parent on an average salary would have, at best, £400 a month after paying for childcare bills.

Stuart Carmichael, of the Debt Support Trust says: “Many families face a financial dilemma after a child is born and it’s a problem which needs to be addressed. While efforts have been made to make it more affordable for parents to return to work after the birth of a child, for low income families, the financial benefit can be very limited.”

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