The cost of a nursery place for a child aged over two has risen twice as quickly as wages, according to a report.
The survey by the Daycare Trust, the national childcare charity, shows that despite the downturn, nursery fees for a child of two or more have increased by 4.8% since last year, “far exceeding the growth rate of 2.1% for the average wage in the same period”.
The most expensive nursery in the survey was in the West Midlands, costing £11 an hour. Parents buying 50 hours a week of childcare could pay more than £28,000 a year – almost as much as at Eton.
London and the south-east remained the most expensive in Britain for all forms of childcare. In London, the average cost of 25 hours’ nursery care for a child under two is £118.54, equating to £6,164 a year. By contrast, the same provision in the north-west is £82.70 a week, or £4,300 a year.
The survey, compiled from figures submitted by family information services in England, Scotland and Wales, examines by region the cost of childminders, nurseries and after-school clubs as well as the availability of childcare. The charity says it found significant rises in costs for all forms of childcare, although the expense varied considerably between regions.
Anand Shukla, acting chief executive of the Daycare Trust, said: “When parents sit down to calculate their family finances and see childcare costs increasing far faster than their wages, it is no wonder they may think twice about the economic sense of staying in work. These high, rapidly rising costs are particularly significant given the number of people not receiving cost-of-living pay increases this year, the increase in VAT and rising costs of other household goods, particularly food and fuel.”
There has also been increasing concern about the government’s plans to reduce the childcare element of the working tax credit, which from April will cover up 70% of childcare costs for poor working families, rather than the current 80%. “Once this change comes into place, some families will effectively have an extra £546 a year added to their childcare bill,” said Shukla. “Yet parents in the UK already spend an average of one third of their net income on childcare costs – more than in any other OECD country.”
Rhian Beynom, policy officer with the anti-poverty charity Family Action, said it was concerned that poorer families were already not taking up free provision of childcare, especially in London. “These figures will really affect the take-up of nursery places from the most vulnerable families.”
Experts said rising costs had several explanations. Ryan Shorthouse, of the Social Market Foundation thinktank, said that “an increasingly qualified workforce has pushed costs for nurseries upwards, as has a focus on attracting even younger children, which require higher child to staff ratios. Parents also increasingly start their children’s schooling earlier and maintained nurseries attached to schools become more popular. At the same time, funding from local authorities has often been insubstantial. The result is rising costs.”
Have you raised your nursery fees? If so, how does this compare with this time a year ago? Have you experienced conflict from parents regarding an increase in fees? Drop your comments below to enter the discussion.
Further Reading:
NDNA Says Rises in Childcare Costs Illustrate Why Free Nursery Education Issues Must be Resolved
Daycare Trust reports that councils fail to provide childcare
[...] demand for a day nursery in your area. Many nurseries have struggled over the past year and the rise in childcare fees has also caused many parents to be unable to afford childcare for their [...]
I too have to agree with all that has been said, as a small private nursery. We have been hit by the government funded places of 15 hours and 10 hours for the 2 year olds. We are paid next to nothing for these places, parents are only asking for the funded hours per week that they can get. yet we still have to provide staff cover.
We have our over heads to cover wages, bills etc, my staff work and put in more hours past their working time, yet i can not give them a pay rise this years and for the past 2 years. what are we to do? how do we keep going on.
The government need to put more money into small nurseries as the big one are slowly eating us up.
The Daycare Trust comment that families are struggling to pay increases in childcare costs because of increases in other costs such as the increase in VAT, increases in food and fuel. Well nurseries also have to bear the burden of increased ‘household’ costs only to a far greater extent. We have increases in the cost of waste collections due to increases in government landfill charges. We have to pay full (increased rate) VAT on our already extortionate fuel costs. In our area we have to pay a supplement on our water rates to pay for the rainfall which runs off our roof into the drains!!!. I could continue to catalogue the additional and constantly increasing charges we have to cope with, and all this at a time when the government completely disregard our concerns and continue to underfund us.
Care for the Elderly is also funded through the local authorities, however where there is a shortfall in the fees the Care Home are allowed to charge a top up. Why then are we not allowed to do the same?
Hi
I too am a private nursery, this term we have 48 children attending, 45 of them are funded only places. The setting is in an area of deprivation and with 90% of the children with English as a second language, so we have lots of challenges to cope with. We only have 3 children who pay, one full time, one 2 days only and the other part time 2 days of 3 hours a day.
I have 5 staff as well as myself. I dont get a wage yet work from 7 to 7. The other staff all rotate on a part time 5 hourly basis. I cannot afford to give them the pay rise they so deserve. Today, we only have one child in, the full time child. I cannot raise the fees anymore for this poor child’s family as he is the only full time child we have. Well how do I poay my staff? I only receive £3.49 per hour per funded child. I costs in the region of £19.50 per hour to have each funded child in the nursery.
It’s just time before we close down as I cannot afford to pay for the privil;ege of stayinbg opened.. This week we have the 5 staff and 1 child. When we have the next holidays I have to make plans to let them have unpaid leave or take their holidays and this isnt fair but unless I do this, I cannot afford to pay the rent for the hall which has to be paid regardless of if we are there or not and the wages and other overheads.
It’s about time that the government and local councils give us our just rewards. Pasy the settings the going rates for taking these funded children or scrap the free places. (Incidentally, funding for each child varies dramatically across the country. We in Croydon get £3.49and hour over in Bromley I was told that one nursery receivged over £4.00 an hour and in places outside London they can get as much as £8.00 an hour. How can this be?
I see that the schools are always fairing well because they get other govt subsidy and other funds that private providers have no access to.
Someone somewhere should be helping the small private providers. It’s ok for the ‘big boys’ the large chain of nurseries who seem to be doing allright.
I keep on hoping and praying.
[...] the past couple of weeks we have seen a report that nursery charges have risen twice as quickly as wages and that children’s literacy is not good enough in early years settings; do you believe that [...]
Does anyone know where we stand as Private Nurseries, with the change in legislation to allow “top up”. I believe the Conservative Government, were going to abolish the ‘non top up fees’, just trying to get an update?
I feel as owner of a large nursery, that the low cost offered by the governement is unsustainable, and in an industry where staff wages are already low in comparison, it leaves no option but to either, increase the fee to parents, outside of Goverment Funded hours, or staff remain on low pay. This is so typical of short sightedness in Government, and not actually having any insigh, into the long term detriments, of this cut. What other industry, has to jump such illogical and irrational loops… Why not just give the money to the parents and let them have “Freedom of Choice” as to where they choose to send their child.
I was surprised to read that some parents are paying £22,000 per annum for daycare. Many parents do not even earn this much in a year. It hardly seems worthwhile to work during this valuable period of a child’s development if this is the cost. Parents could be taking the time out to be with their children and pick up careers again when full-time school starts. I know the argument about losing ground in the professions and having to start from the bottom again but supporting a child’s development is worth it.
why o why are the government setting a minimum wage for employees but pay us below the minimum wage for childcare!!!!!!!!!!!!!!!
New nursery and 71% of our children are NEG we offer flex time, lunch etc by word of mouth we should have a extra 15 children for next term. This means the number of under three’s also grows as parent talk. But we are a community nursery and planned for the NEG and our fees where set low to help families, don’t believe this could work in private nursery.
I definately agree with the comments on the 15 hours flexible funding. If it was straight forward 3 hours a day, morning or afternoon sessions it wouldn’t be so bad, but with parents taking up 6 hours a day which means that we have to employ extra lunch time cover whereas before we could cover the fee paying children and incurring a loss on a whole days place of around £12.00, then its no wonder fees are having to rise.
Normally my fees rise by £1 a day, but this year Pre-School fees had to rise by £2 a day and NEG funded parents now have to either pay for lunches and snack or bring them in, whereas before I provided snack. I need to keep the quality of provision up so these steps were necessary. Sustainability is becoming a nightmare, even for a full nursery like us.
I have also put up my fees to cover the shortfall of the 15 hours.
We are a very popular sessional pre school and offer places to children from the age of 2. If they do not take up the place when they are offered it, the place will be offered to the next child on the list. However, some parents are saying they don’t want the place until the child is funded. Unfortunately by waiting they often loose their place. So the most needy loose out. I am in an area where pre schools have closed down.
We have yet to find out whether this will mean some children are entering mainstream school in September in 2012 having not attended a pre school at all.
For the amount of time and work my staff put into planning and record keeping I would still like to pay them more.
My rural group has put the fees up for the younger children to the level of the EYEF in three steps over the past 3 terms…we had subsidised these until recently as a charity, but couldn’t continue doing so with the single intake offer being introduced in this area in September 2011 – we are projecting between 20 – 25% reduction in income for the year through loosing all our older children a term earlier.
The preschool’s future isn’t certain. I’m certain other groups will feel the same.
The staff work really hard to meet all the demands placed upon them – the records we keep now, compared to 15 years ago, just don’t compare..so much more planning, record keeping & paperwork…..None of us are paid enough.
Totally agree with Libby – a major reason for fee increases for under 3 is the Governement’s 15 free hours. When are they going to wake up to the fact that nurseries cannot survive if they are not allowed to charge top up fees? We were able to keep our charges at a reasonable rate before the introduction of the 15 hours. In fact we kept the same charges for 3 years and the same charges were applied to all. Now we have to charge higher fees for 2 year olds and we now charge for snack and administration which were all included before with our standard rate. Our higher charges have had an impact on our numbers. May I also add that we have to encourage parents to take up the full 15 hours – some 3 year olds just can’t cope but rather than thinking about the children we now have to try to “encourage” more hours. It just beggars belief. I actually think that the grant should be means tested so that the money goes to the most disadvantaged children. Nurseries should not pick up the tab for the Government’s underfunding. Something needs to change – increased Nursery fees are only the beginning of the forthcoming crisis in the industry. Nurseries are already closing or opting out and there will be a shortage of places.
I completely agree with the comments below. What also seems to not be mentioned in the above is that fact that local governments have ‘advised’ nurseries to up fees on under threes’ due to the EYFE introduced. As a nursery who charged all of our children the same rate for fees we had to hit our parents of children under three with a higher rate of fees in September after being told that this was how we would be able to stay sustainable after the EYFE was bought in.
I am sure we were not the only setting being adviced to do this, so ofcourse the cost of two year old places has risen so dramatically.
It’s not fair that settings are being blamed for these increases. We are not greedy we are running a business. If the government left private businesses alone we would not have to up our prices to cover the shortfall they have caused.
I think I put our prices up 4.8 per cent last September, but it is still not meeting the increased cost of food, heating, insurance, staffing etc, and the money we are losing by providing NEF places. None of the parents complained about the increase, in fact a few said they completely understood.
The Government should not reduce the child tax credit, as that has done a lot to help lower earning families return to work. However, parents are still able to save tax on childcare vouchers and also the over 3s get 15 hours free through NEF. Young parents can get free childcare to continue their studies, as can the unemployed returning to work.
What hasn’t been mentioned in all this publicity is the terrible wages that our fantastic nursery staff earn.
However, at the end of the day children are their parent’s responsibility.
As the owner of a small chain of nurseries I can tell The Daycare Trust and Social Market Foundation exactly why nursery fees are rising. They are rising because owners such as myself are having to make good our financial shortfall from the Government’s 15 hrs free entitlement. Let us not muddy the waters by trying to pass the blame for this onto the local authorities. They are just the messengers of government thinking.
The blame for price rises in nursery fees lies fairly and squarely at the door of central government. Unless they allow nursery owners to charge top up fees, or to pay us the going rate for places, then our financial shortfall will be passed onto parents through higher fees for all children not falling within the 15 hour free period.
If we don’t increase our fees in line with the shortfall then I (and others like me ) would, individually, have to pick up the cost of government policy. I can’t think of any other industry where individuals are having to pay for government legislation.