Childcare costs have risen by 7% in the last 12 months, according to new report - and supply shortages are still a major issue

A new report has highlighted how high childcare costs have got even higher over the last 12 months and laid bare the impact of chronic childcare shortages.

Parents are not new to dealing with high average childcare costs, sometimes with devastating consequences - a recent survey found that 85 per cent of parents cited the high cost of childcare as the main reason they weren't expanding their family.

The government also provided some hope for struggling parents in the form of an expansion of its free childcare scheme. It was announced that the 15 hours free childcare scheme would be extended to include two-year olds as of April 2024, and all children over 9 months old as of September 2024.

However, as the Childcare Survey 2024 from Coram Family and Childcare draws attention, working parents hoping to benefit from these government-subsidised hours are left wondering whether the government can actually deliver on its promise, especially after it said it 'couldn't compel' providers to offer the scheme.

The report found that that a part-time (25 hours) nursery place for a child under two costs an average of £158 per week - seven per cent more than it did in 2023. This rises to an average of £218 per week in inner London which is the most expensive area in the country. For a full-time (50 hours) nursery place for under twos, the average cost has increased by 5.9 per cent, from £285.31 in 2023, to £302.10 in 2024.

Furthermore, the survey also brought to light that some parents are being required to buy additional hours when taking up the government-subsidised hours, which providers are not allowed to do. The government guidance states that the purchase of additional hours should not affect the parent's ability to take up their child's free place. But while more than 60 per cent of local authorities said that 'none, or very few' providers in their area were requiring the purchase of additional hours when taking up the funded places, there was a worrying percentage that did adopt this practice.

Coram Family & Childcare's report also uncovers the extent of national childcare shortages and the impact on families. The survey found that only 34 per cent of local authorities in England reported having sufficient childcare for parents working full time, which is 14 percentage points less than 2023. A similar percentage (35 per cent) reported enough childcare for children under two, which is also down 14 percentage points on 2023's findings.

As the expansion rolls out, a third (33 per cent) of local authorities also expect there to be fewer available places for children with special educational needs and disabilities (SEND), according to the report, 'resulting in children with the greatest need being most at risk of missing out'.

These are concerning statistics, when you consider the first phase of the childcare expansion is due to come into effect in April, with applications for the second phase, coming into effect in September 2024, opening on 12 May 2024. According to Coram's data, 63 per cent of councils in England are confident that there will be enough childcare places to meet the demand come April. But this falls to 28 per cent when referring to the September 2024's phase of the expansion, and again to 12 per cent for the final phase, which will roll out 30 hours free childcare for children from nine months old from September 2025.

Speaking of the findings, Ellen Broomé, Managing Director of Coram Family and Childcare, says: "The new childcare support that is being rolled out from April has the potential to be a game-changer for parents up and down the country – many of whom have found themselves facing eye-watering childcare bills and sometimes even locked out of work because of childcare costs.  

"Our findings – with higher costs and dramatic drops in availability of childcare places – are concerning at this crucial time, showing the scale of challenge and the very real risks around this policy not living up to parents’ expectations.

“The recent additional funding from the Chancellor was welcome but won’t address the long term systemic challenges of high childcare costs for parents, the workforce recruitment and retention crisis or the lack of availability of places for children with SEND."

For more help with childcare costs, make sure you understand what child benefit you could be entitled to, and how the child benefit shake up could make the system fairer, especially for higher earners.