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Childcare vs pay: The wage it’s worthwhile to make working as a mother or father pay

  • How soaring fees mean thousands struggle to earn more than nursery costs 
  • We reveal how much working parents need to earn to beat childcare 

Up and down the country in online chatrooms, baby classes and hospital waiting rooms, the cry of despair about the punitive cost of childcare has never been louder.

That’s if both parents actually manage to return to work at all, with nursery places so highly sought-after that couples routinely put their names down for a place in the first three months of pregnancy. 

This competition will only increase as research out this week says ‘childcare deserts’ now leave parents across England without options as the number of nurseries and childminders has fallen by a fifth since 2019.

Then there is the heavy burden of cost. Full-time places in nursery now cost as much as £140 per day — the equivalent of £33,700 a year for one child or £2,800 a month. 

That means pre-tax earnings of £45,000 a year or £3,750 a month for one child, assuming pension contributions of 5 per cent.

Costs: The average cost of a full-time 50-hour-a-week nursery place for under two-year-olds is £430 a week in London and £308 in the South East of England

Costs: The average cost of a full-time 50-hour-a-week nursery place for under two-year-olds is £430 a week in London and £308 in the South East of England

Money Mail has spoken to more than 70 parents of babies, toddlers and pre-schoolers around the UK to find out how they are tackling these giant fees.

We spoke to parents who have had to cut their working hours to mitigate the cost of childcare. We spoke to mothers working full-time and spending every penny they earn on nursery school fees. Some couples are postponing having a second child simply because childcare costs are so high.

We’ve also spoken to families going to extraordinary lengths to mitigate the costs of childcare by relying on grandparents commuting for hours each week to take up childcare duties — often because nursery places are not available.

The UK is one of the most expensive countries in Europe for childcare, despite various Government handouts to ease the burden on working families. 

Last month the Government introduced funded hours for two-year-olds in England, and from September parents of babies as young as nine months can claim 15 free hours a week.

Yet these free hours only scratch the surface on costs. There is no set fee for nurseries — they can charge whatever they like, according to demand.

Meanwhile, nurseries are also increasing prices to keep up with rising costs and to ensure the new government-funded hours don’t leave them out of pocket.

The free hours offered by the Government are term-time only. If you want to spread the free hours across a full year, it works out at 11 hours a week.

So how much do parents really need to earn to cover the cost of childcare? Money Mail crunches the numbers.

How much do you need for nursery? 

The average cost of a full-time 50-hour-a-week nursery place for under-two year olds is £430 a week in London and £308 in the South East of England, according to Coram’s Childcare Survey 2024.

On fees of £430 a week, you’d need to earn a pre-tax annual salary of £27,000 a year just to break even with the fees. 

Anyone earning less than this would effectively be paying to go to work. If you have twins, or are paying for two children who are two years old and under, you’d need an annual salary of £60,000 to cover the cost.

Nurseries are increasing prices to keep up with rising costs

Nurseries are increasing prices to keep up with rising costs

Even in the East Midlands, the cheapest region for childcare, according to Coram, the average cost per week is £250. Here you’d need a pre-tax annual salary of £13,500 to cover fees, rising to £32,500 for two children.

While average childcare fees in the table are high enough, many parents will, in fact, be paying more. No official data exists on fees for individual nurseries. It is hard to easily compare prices of their local nurseries as some do not openly list fees on their website. The parents we polled say they are paying fees from £60 up to nearly £100 a day per child.

And in the North, prices can be comparable with down South. One mother said a nursery in Leeds charges £89.50 a day, known to be the most expensive in the area, while another is paying £75 a day in North Yorkshire.

The most expensive nurseries charge close to £140 a day in parts of London, according to our own research and inquiries among nurseries in several affluent areas in central and north London.

Based on a full-time place, £140 a day would be equal to around £33,700 a year for one child or £2,800 a month (if a full-time discount of 5 pc is applied, which some nurseries offer).

Those requiring three or four days would find their annual bill is £21,420 or £28,560, based on 51 weeks a year as many nurseries close for a week over Christmas.

Last October, writer Keeba Critchlow, 36, and husband, junior doctor Ben, 35, moved with two-year-old daughter Matilda from Harpenden in Hertfordshire to Leighton Buzzard, Bedfordshire.

In Harpenden, Matilda’s nursery cost £900 per month for two days a week and others were charging as much as £1,900 a month full-time.

Keeba says: ‘The only way we can afford childcare is for Ben’s parents, who are divorced, to do two days-a-week free childcare, travelling alternate weeks from their homes in Devon and Carlisle. 

That’s a round trip for each of eight to ten hours. They arrive Monday and stay until Thursday morning and look after her on Tuesday and Wednesday.’

Matilda is at nursery on Thursdays from 8.30am-6.30pm and Fridays from 8.30am-6pm. Keeba leaves work two hours early to make pick-up time.

‘We have an NHS discount because of Ben’s job but it’s still £400 a month even with 15 free hours. We’ve waited longer than we’ve wanted to expand our family and it’s purely because of childcare costs,’ adds Keeba.

The Critchlows are not alone. A survey of 1,000 parents last year found 63 pc said they would delay having another child — or not have another at all — because of the high cost of childcare.

It’s the same situation with Carla Boyd, 33, a marketing manager based in Greater London, who is holding off having another child with her partner until their eldest is in school due to the high cost of childcare.

She pays almost £300 a week for her son to attend nursery 8am-3pm, five days a week, in Harrow.

It was more affordable for her partner, a customer services manager, to reduce his hours from 40 to 30 hours a week to be able to pick up their son at 3pm. 

Their little boy turned two in April but the couple will have to wait until September to receive the funded hours as it starts the term after they turn two.

‘We have to pay for another five months before the extra funding comes in, which is frustrating,’ Carla says.

‘It’s difficult to find much information online about a nursery’s fees. We pay £8.50 per hour. For that, we have to pack lunch and snacks every day, as food beyond breakfast isn’t included, and we also have to provide our own nappies and wipes.’

Over in Fulham, south-west London, Ghislaine Little, 36, a mother of two children aged three and one, tells us she feels she is paying to work. 

Ghislaine, who is training to be a solicitor, puts her children in a nursery in Fulham, central London, three days a week. Fees are around £110 per child, per day, and the total cost is £2,539 a month with a sibling discount.

She says she would not have been able to afford full-time childcare as it would have cost more than £4,000 a month.

The nursery also charges a £2,000 deposit per child to secure a place, which is repaid once the child leaves nursery.

Ghislaine says: ‘I wouldn’t say we were naive to the cost of having two in nursery, but perhaps we didn’t completely think it through. We didn’t want the cost to be the reason for not having a second child, but we are questioning whether we want a third.’

Carole Erskine of Pregnant Then Screwed says: ‘Many parents simply can’t afford to have children due to the ever-spiralling costs of childcare. Having children is becoming a luxury item for many, and we need to nip this in the bud fast for the sake of our economy.’

Competition: With nursery places so highly sought after that couples are routinely putting their names down for a place in the first three months of pregnancy

Competition: With nursery places so highly sought after that couples are routinely putting their names down for a place in the first three months of pregnancy

Why 15 hours free is less than £100

Two-year-olds in England are now entitled to 15 funded hours of childcare per week across 38 weeks a year, aligned with school term times. Previously, the funding only became available from the term after a child turned three.

Those who turn two this month do not yet qualify for the funded hours, as they can only claim from September — the term after their child turns two.

Even parents who qualify may find there is little difference to their monthly bills.

A third of 6,250 parents with two-year-olds surveyed by the campaign group Pregnant Then Screwed said the new funding will save them less than £100 a month.

This is because average daily prices and top-up fees are rising, meaning any cost savings from the new funding are lower than expected. 

Government funding for the so-called ‘free childcare’ offers has failed to keep up with sharp increases in the national living and minimum wages for several years, alongside other cost pressures such as rising energy costs and wider inflation, says the Early Years Alliance.

The Government pays nurseries a set hourly rate to cover the cost of the free placement, but the amount differs between local authorities.

Many nurseries say the hourly rate they get from the Government does not cover the actual cost. The average funding rate per child is currently £8.28 an hour for two-year-olds and £5.88 for three and four-year-olds. 

Even though the rate for two-year-olds has increased to coincide with the new funded hours, a survey by the National Day Nurseries Association (NDNA) found nurseries still have an average shortfall of £1.69 per hour per child, and the average shortfall is £2.36 per hour for three and four-year-olds.

‘We have been calling for the Government to address underfunding for years. For the vast majority, the hourly rates are still not keeping pace with rising costs,’ said Purnima Tanuku, chief executive of the NDNA.

The shortfall is plugged by nurseries charging top-up fees for extras such as nappies or meals or increasing prices for all parents. The average fee increase to parents in April was 8.5 per cent, says the NDNA, and prices are expected to rise again next April.

Even those who receive the funded hours are likely to feel the impact of rising fees, as it’s likely they will pay prices beyond the 15 free hours a week term-time only. Some nurseries choose not to offer the free hours at all, because they are already at capacity or government funding doesn’t go far enough.

There is no limit on the amount that nurseries can increase prices — sometimes with little more than a month’s notice. 

A survey of nurseries from the Early Years Alliance in February showed 81 per cent of nurseries planned to increase fees in April, while 52 per cent intended to introduce or increase top-up fees.

Help with your childcare costs 

There is some tax relief available to parents through Tax-Free Childcare, where the Government subsidises 20 per cent of childcare costs. But there is a cap of £2,000-a-year per child that can be claimed — an amount that has not changed since being introduced in 2017.

The eventual plan is that all children from the age of nine months will be entitled to 30 hours of funded childcare a week, term-time only. Spread across the year, the funded hours fall to 22 a week.

However, not all parents qualify for the tax relief or funded hours. If an individual in a household earns more than £100,000 in England and Wales, they cannot access tax-free childcare or the new funded hours.

The maximum they can claim is 15 funded hours a week after their child turns three.