Childcare costs second only to London

The average annual cost of 25 hours a week of care for children under two years-old in Scotland is 5,178, higher than the average south of the Border of 5,028, shows the study by the Daycare Trust.

Critics warned parents and their children would suffer because of the higher cost, with some forced to remove their children from care or quit work.

The study, compiled from figures submitted by Family Information Services in England, Scotland and Wales, examined the cost of childminders, nurseries and after-school club provision, along with the availability of childcare.

Although costs for over-twos was slightly higher in England, costs overall for childcare are above average in Scotland.

The cost for under-twos was 100 for 25 hours a week compared with the UK average of 96 and for over-twos is 98 a week compared with 94 UK average.

Anand Shukla, acting chief executive of the Daycare Trust, said: "When parents sit down to calculate their family finances and see childcare costs increasing far faster than their wages, it is no wonder they may think twice about the economic sense of staying in work.

"These high, rapidly rising costs are particularly significant given the number of people not receiving cost-of-living pay increases this year, the increase in VAT, and rising costs of other household goods, particularly food and fuel."

She said the national childcare charity feared families would suffer further with the reduction in the childcare element of working tax credit, which from April will only cover up to 70 per cent of childcare costs for low-income working families, rather than the current 80 per cent. The trust believes some families will be forced to pay up to 546 a year extra for childcare as a result of the tax change.

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She said: "Parents in the UK already spend an average of one third of their net income on childcare costs - more than in any other OECD country."

She was critical that many local authorities were not providing enough nursery care.

Eileen Prior, executive director of the Scottish Parent Teacher Council (SPTC), said good quality, affordable childcare was fundamental for many parents.

She said: "Without it many families will be forced to live on lower incomes as work becomes uneconomic, and some children will be deprived of the social and developmental support they receive there."The increasing cost burden on families can only be seen as a negative, which will bring consequences for children in particular and for wider society."

A rise in business rates has seen many privately-run nurseries forced to increase charges.

Critics blamed the Scottish Government for failing to deliver its election manifesto pledge in 2007 to increase the provision of free nursery care for three- and four-year-olds from 400 hours to 600 hours a year.

Des McNulty, Labour's education spokesman, said: "The prospect of cuts in child benefit and welfare benefits by the coalition at Westminster will make things worse, both for working parents and those who are struggling to find employment.

"Councils are struggling to keep breakfast and brunch clubs going and many after-schools care providers are complaining about new demands by the Scottish Social Services Council that could make it difficult for them to continue. "We need a proper look at how we can deliver more affordable childcare to families who rely on these services to educate and look after their children while they work - contributing to the Scottish economy."

Teachers warned that without high quality nursery education, children's life chances would suffer. A spokesman for Scotland's biggest teaching union, the EIS, said: "Parents recognise the importance of good nursery education and value the high-quality provision in local authority nurseries staffed by professional teachers.

"As parents face increasing financial pressures in the current economic climate, the value of proper public investment in nursery teaching will become ever more important to ensure that all young children receive the best start to their education."

A Scottish Government spokesperson said: "We have increased free nursery provision for three and four year-olds by 20 per cent. The Scottish Government is committed to supporting accessible, affordable, flexible, good quality childcare to meet the needs of parents and those of their children.

"The impact of UK government changes to benefits will certainly have an impact on working families in Scotland. Benefits are a reserved issue but we will continue to work with our UK counterparts to get a fair deal for Scotland."