Cost of nursery places like ‘second mortgage’

The report, by the Daycare Trust and the Family and Parenting Institute, says fees are approaching the levels charged by private schools, with the burden like a “second mortgage”.

The cost of childcare varies widely across Britain and can reach as high as £42,000 a year for a full-time place at one London nursery, more expensive than boarding at a top public school such as Charterhouse.

In London, average nursery fees are £14,000 a year for a full-time place.

The report says that in the last year the average nursery cost for a child aged under two has increased at an above-inflation rate of 4.2 per cent, to around £106 a week for a part-time place at 25 hours a week.

Costs for children aged over two have increased at an even faster rate of 6.6 per cent annually to around £104 a week for a part-time place.

‘Increasingly difficult’

Anand Shukla, chief executive of the Daycare Trust and the Family and Parenting Institute, said: “The survey makes clear that, from a parent’s perspective, costs are increasingly difficult to manage which is a finding that should concern us all.

“Families are being expected to pay more for their child’s nursery place – an average of £14,000 per year in London – than the fees for many private schools, and this cannot continue.”

The report blames “market failure in our childcare system” for the rise in costs, with a lack of suppliers to meet demand in some areas.

The vast majority of nursery care is delivered by the private and not-for-profit sectors in England.

Staffing costs

Staffing costs are the biggest expense. Salaries are not high, but regulations on carer/child ratios make nursery care expensive, although the government has announced plans to modify these ratios.

One of the ways the government helps parents with costs is a voucher scheme available through employers which allows mothers and fathers to pay for childcare out of their pre-tax wages.

Basic rate taxpayers can pay for up to £243 of childcare a month with the vouchers.

In addition, parents of three and four-year-olds are entitled to 15 hours of free nursery care a week. Parents of some two-year-olds also receive assistance.

There is also help through the tax credits system.