Working, middle-class parents are struggling with high childcare costs and relying primarily on grandparents to care for their children, according to new research by investment house Killik & Co.
In The Real Cost of Childcare Report, Killik & Co found that couples with a child under five are spending £6,500 a year on childcare on average, but overlooking a potential windfall of £8,384 per year in financial support from the Government.
The report provides an insight also into the practicalities of raising a young child when both parents work; for example, childcare costs are deterring half of them from having more children and forcing more women to reduce their working hours.
Parents’ wider family members play a vital a role in childcare, with 71% of those polled relying on family for childcare to enable parents to work. Over 92% of that help comes from grandparents (or 65% of the total respondents), who are increasingly being called upon to help with childcare as parents struggle with costs and balancing work. Over 9.2 million grandparents spend an average of nine hours a week looking after grandchildren, saving parents over £1,900 in childcare fees. In addition, over one in five (22%) of those polled are hoping that their parents or grandparents will contribute to the costs of raising their child/children.
Aunts and uncles also play an important role in helping with childcare according to 34% of those polled, and sprightly great-grandparents and cousins get involved too (9% and 8% respectively).
The survey reveals 40% of parents have cut back their working hours in the last five years due to the cost of childcare. More than double the number of women (49%) than men (22%) have reduced their working hours in the last five years due to the cost of childcare.
Parents are struggling to meet the costs of childcare and save. When asked what parents would do with any potential savings from the new childcare schemes outlined below, respondents gave a variety of answers: 48% would add it to an existing savings account, 31% would put the money towards their mortgage, 18% planned to spend more on childcare, 10% were keen to invest, 9% would add to their pension and 4.5% would pay off debt.
The vast majority of couples are not using two recently launched Government schemes that offer combined savings of £8,384 for parents with children aged three to five: 30 hours per week of free childcare in England – raised from 15 hours in September 2017 – and the Tax-Free Childcare Scheme introduced across the UK in April 2017.
- Only 31% of parents are using the initial 15 hours free childcare, with average savings of £3,192 per annum;
- None of the couples have started using the additional 15 hours free childcare introduced in September, worth an additional £3,192 in savings. However, just over a fifth (21%) do plan to use them in future;
- Only a fifth are using the Tax-Free Childcare Scheme, with inherent savings of up to £2,000 if a couple spends £8,000 on childcare via an online account which can be opened through the GOV.UK website;
- 40% of couples are using an existing Childcare Vouchers scheme, which will be closed to new applicants from April 2018, allowing parents to make £933 worth of savings per year each. Childcare Vouchers can be used in conjunction with the 30 hours free childcare scheme highlighted above.
Given that over seven in ten parents surveyed hope that at least one of their children will attend university and one in eight is planning on private education for their children, the firm behind this research says these schemes are the perfect incentive to save and invest on a regular basis.
We'd love to hear your thoughts on this. Do you use any of the schemes outlined above to help with the costs of childcare? And do grandparents or other members of your extended family help with childcare while you're at work? Leave us a comment here or come and join the conversation over on our Facebook page.