Help for childcare must keep up with the rising cost of living

With the cost of bringing up a child now approaching £90 a week, the government needs to do more to help low-earning families, says Katie Schmuecker.

Now the summer holidays are in full swing, it will not come as news to many that having children can be costly. New research published today by Child Poverty Action Group and JRF calculates it costs a couple £83,000 over 18 years, or £89 a week, to raise a child with an adequate standard of living (this figure does not include rent or childcare costs – factoring these in increases it to £154,000, or £165 a week).

There are two important things to note about these figures:

  1. They do not come from academics in ivory towers. Rather, they are based on detailed conversations with members of the public about what things people need (rather than things that are nice to have) for a minimum socially acceptable standard of living. It includes the cost of meeting basic needs like food and clothes, as well as some social and cultural activities which people also think are important. For example, being able to take children swimming and having a cheap one-week self-catering holiday in the UK (for example at Butlin’s) are included. 
  2. The calculation includes all the additional costs that having children brings to a household rather than simply the items a child needs. For example, having children requires a house with more bedrooms, so the calculation includes the additional rent that would need to be paid, and the extra cost of heating a larger home. 

The report demonstrates how difficult it has been for a lot of families to meet this standard of living in recent years. The cost of essentials has soared ahead of earnings, at a time when state support for family living costs, through child benefit and child tax credits, has been reduced.

For families in low-paid work, the cost of formal childcare emerges as a major contributor to the rising cost of living. Since 2008, childcare costs outside London have increased by 42 per cent on average.

The government has made childcare costs central to its approach to helping families with living costs. Their plan to help low-income families with 85 per cent of their childcare costs through Universal Credit will make a big difference (compared to support with 70 per cent of the cost currently available through tax credits). However, the policy also, understandably, sets a maximum for the level of childcare costs that the state will support. The problem is that support is currently capped at £175 for one child – a figure that has not changed since 2005. Given how quickly the cost of childcare has increased in recent years, it won’t be long before the average price of childcare outside London exceeds the cap. Inside London, average full-time fees are already well above the limit.

If the government isn’t careful, its positive plan to support family living costs will be undone. Alongside greater help with childcare costs for low-income families, it should look at increasing the cap in line with the rising cost of childcare. This would make a significant contribution to helping some low-income families meet the cost of raising a child.