The cost of childcare directly influences the family finances, and many families end up as single-income households so that one parent is taking care of the children. This has long-term repercussions for the family income, the standard of living, amongst other factors.

Nearly £15k a year for childcare in the UK

According to the OECD, the UK is third at the top of the list of most expensive childcare. It is only surpassed only by Switzerland (where everything is expensive anyway, but salaries are also much higher) and New Zealand.

Coram, a British charity, reports that UK parents have to now foot an astounding bill of £14,836 per annum for a full-time nursery for a child under the age of two. This is a 6% increase from the previous year; available spaces at nursery schools have also dropped.

Additionally, over 25% report that the cost of childcare exceeds three-quarters of their net salary and families are struggling to meet their financial obligations.

These rising costs and limited seats in childcare facilities have forced parents to rethink their employment status, and many women especially are discouraged from returning to work full-time after their maternity leave whilst others opt not to return to work at all.

Parents are rethinking whether they can afford to work with soaring childcare expenses and some couples are postponing or even opting not to have another child.

How much does childcare cost in the UK?

As per the National Childbirth Trust, childcare for a child under the age of two typically costs on average £138 per week (part-time) or £263 per week (full-time). Employing a childminder could set a household back about £71.06 weekly. Childcare during the holidays can average £139.60.

Where you live also impacts the costs, e.g. costs in London are typically £45 per week than in other areas of the UK.

Reasons childcare is so expensive

Current UK regulations require a ratio of one adult to three children under two year olds. This places a huge burden on staffing childcare facilities.

Additionally, UK government support is not as good as in other European countries.

However, in a bid to address parents’ financial struggles, the Chancellor has announced that there will be an optional change to the ratio of childminder to the maximum number of two-year-old children under their care to 1:5. This change will be effective from September 2023.

The government is also looking into other strategies such as childcare subsidies and increasing contributions to a tax-free childcare scheme. They said to be committed to “considering new plans to improve the cost, choice, and affordability of childcare”

Childcare is highly subsidised in other European countries

According to the OECD, average childcare costs is a whopping 52% of women’s median full-time earnings in the UK, while in countries like Germany and Austria are less than 5%. This translates to only €1,310 per year on average.

In many European capital cities, childcare is free or extremely affordable. Childcare is highly subsidised which slashes the financial burden of parents.

Countries like Belgium, Denmark, Lithuania, Norway, and Slovenia provide free childcare access for children under the age of three.

Nordic countries are ranked very high on the list of “best countries for raising kids” with Denmark in the lead, followed by Norway, Sweden and Finland. This is largely based on the generous state subsidies citizens receive.

In Sweden, parents receive an allowance of SEK 1,050 monthly per child which can be used to pay for preschool that is on average SEK 200 per month.

In Denmark, childcare is capped at 30% of the actual cost of preschool or nurseries, and the latter usually doesn’t exceed DKK 3900 per month.

In Norway, parents receive a child benefit allowance of NOK 1054 per month. Single parents are entitled to double that allowance. The childcare costs are no more than NOK 2500 per month.

The Netherlands is planning on implementing a scheme by 2025 where almost 95% of childcare expenses for all working parents are subsidised by the government.

In Germany, the local municipality provides a place in its network of daycare centres, called Kitas, to any child older than one year. Children at this age are legally entitled to attend daycare. The government subsidises the costs of the daycare.

Offering free childcare as a way to boost birth rate

In Portugal, the government is undertaking to provide free childcare to all children under one and increasing the existing capacity shortly to offer this to more infants. In three years the government hopes to offer free childcare to include children in primary school. Ana Mendes Godinho, Portugal’s Minister of Labour, said:

"[Free childcare will] be lifesavers for many children, allowing them from the beginning to be part of a collective system that integrates them, namely fighting child poverty and cutting intergenerational cycles."

Historically, Portugal has already been offering free childcare to low-income households to encourage people to have more children since Portugal is experiencing one of the lowest birth rates globally.

In 2019, data collected in Portugal revealed that childcare costs amounted to 40% of a women’s median income which hampers getting a family out of poverty and it perpetuates generational poverty resulting in many disadvantages for the children. This is the reason offering free childcare will fight poverty in Portugal in the long term.

Childcare support as a way to address gender inequalities

There are many enduring socioeconomic benefits to providing free childhood education and care like long-term health benefits, increased future wage income, etc.

When a family’s income is increased children enjoy an improved childhood. Parents who are unencumbered with childcare burdens can seek employment, especially mothers. This can, over generations, remove the family from generational poverty and also address gender inequalities. 

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