Government figures have revealed that 34 percent of parents with children under five found it difficult or very difficult to afford childcare costs in 2023.
This represents a 10 percentage-point rise from 24 percent in 2021.
More than two-fifths (42 percent) of parents with children in this age group said that the affordability of local childcare was very or fairly poor. And 6 percent of parents with young children said they could not find a childcare place in 2023 because local providers were full.
Dilemma for parents
Phoenix Group’s Patrick Thomson, head of research analysis and policy at Phoenix Insights, said: “Meeting childcare costs can be a huge challenge, and parents often face the dilemma of reducing working hours or dropping out of work entirely as they weigh up the benefits of working compared to paying childcare fees.
“These figures suggest the affordability challenge is a growing issue, with around a third of parents with children under-five finding it difficult or very difficult to meet childcare costs.
“The expansion of the free childcare hours in England offers some financial relief for working parents, but policy support needs to go hand-in-hand with measures designed to boost the availability of formal childcare. There is also a crucial role for employers to offer more flexible working arrangements, particularly for those who feel that leaving work is their only option.”
Hidden impact
However, Thomson also highlighted the hidden long term impact for parents that are forced to reduce their working hours. He said it was understandable that parents want to provide for their children today, but he said that shouldn’t have to be at the cost of their own financial security in the future.
“For parents considering reducing hours or leaving work entirely due to childcare costs, it’s important to consider the hidden impact on their long-term savings. Most people saving in a workplace pension pay a proportion of their salary to their retirement savings alongside an employer contribution, so any decrease in earnings from working less can lead to reduced pension contributions.”
