Jeff Salway: Spiralling childcare costs slammed

For many parents across Scotland, childcare is becoming unaffordable Picture: Getty

Calls are growing for radical action from both Holyrood and Westminster to tackle the spiralling childcare costs driving Scottish families into poverty.

A report out next week will warn that the rising cost of childcare is keeping more people out of the job market and forcing growing numbers to turn to foodbanks.

The issue has become increasingly prominent in political debate over the past few months as the impact on families of rising costs has become clearer.

Plans aimed at tackling the problem featured prominently in the Scottish Government’s referendum campaign.

It put forward plans to provide 1,140 hours of childcare a year for all three- and four-year-olds, plus vulnerable two-year-olds, by the close of the first Parliament in an independent Scotland.

Last month one of Johann Lamont’s last moves as Scottish Labour leader was to propose a cap on nursery costs. She said charges should be capped at 10 per cent of the median wage and suggested that free childcare places should be available to any mother wanting to go to college.

The Smith Commission also heard submissions on reform of the Scottish childcare system, while business groups and charities are urging the chancellor to announce more childcare support in next week’s Autumn Statement.

If there’s a single reason why childcare has become a political battleground it’s because of a sharp increase in costs over the past few years.

The cost of part-time childcare for two children is now more than a fifth higher than the average mortgage bill, the most recent Family and Childcare Trust survey of costs in Scotland revealed.

The report, published in March, found that fees for nursery childcare for children under two had risen by almost 5 per cent in the previous 12 months alone.

The average cost of sending a child to nursery in Scotland (on a part-time basis) for two to five year-olds is more than £5,300 a year, rising to £5,514 for children under the age of two, the research found. The average annual annual cost of 15 hours at an after-school club has risen to £1,883 while after-school “pick-ups” by a childminder set families back by nearly £3,000 a year.

The costs can vary significantly by location too, with some local authorities charging up to 80 per cent more for nursery provision than neighbouring areas.

Just one in four Scottish local authorities said there was sufficient childcare in their area for working families (including private provision). In contrast more than half of councils south of the Border believe they have sufficient childcare.

The disparity is due partly to the fact that local authorities in Scotland still don’t have a statutory duty to provide affordable childcare, unlike their counterparts in both England and Wales.

Now Citizens Advice Scotland (CAS) is set to warn that the crisis is pushing more Scottish families into poverty. In a report being published next week, the charity sets out new evidence showing that the cost of childcare is preventing people from re-entering the job market.

It cites the example of a one CAS client in the north of Scotland. Having secured a job after a spell out of work, she was asked by her local nursery for a registration fee of £200 plus the first week’s fees in advance, taking the upfront cost to almost £300. Unable to afford it and with applications for support taking too long, the mother was forced to turn down the job.

An April 2012 change to eligibility rules for tax credit has hit Scottish families particularly hard, CAS found. The overhaul reduced the income threshold below which families were eligible for child tax credits from £41,300 to £32,000 (for families with two or more children) and £26,000 for lone parents.

At the same time the eligibility threshold for working tax credit was raised from 16 to 24 hours of work a week, with one parent having to work at least 16 hours. That change has tipped many families over the edge, warned CAS. It said bureaux in Scotland had seen people turning to foodbanks after finding themselves stuck between 16 and 24 hours a week, where they lose their tax credits but can’t increase their hours.

Some 85,000 families north of the Border have lost valuable child tax and/or working tax credits since the 2012 changes, CAS estimates.

Keith Dryburgh, policy manager at CAS, said: “For too many people in Scotland, childcare is unaffordable and unavailable. We need suitable childcare that works for families, and in many cases, this means having more options available – particularly in rural areas. The UK government also needs to ensure that in-work benefits properly support hard working parents.”

A new UK government scheme aimed at helping families with childcare will launch next autumn, although experts point out that it does nothing to tackle the rising cost of childcare.

Under the tax-free scheme, announced in the 2013 Budget, for every 80p that parents (or grandparents, other family members or employers) transfer into a new, online voucher account, the government will pay in a further 20p, up to a maximum of £2,000.

The support will be available for families with children up to the age of 12 (up to age 17 for children with disabilities). To qualify, parents – or the one parent in a single-parent household – must be working and each earn at least £50 per week but not more than £150,000 a year, and not in receipt of tax credits. But two-parent families where just one parent works won’t be eligible for the scheme, which will eventually replace the existing childcare vouchers.

• For information on funding for childcare, visit www.scottishfamilies.gov.uk or http://www.turn2us.org.uk/

SUBSCRIBE TO THE SCOTSMAN’S BUSINESS BRIEFING

• Get the latest business headlines from a variety of news sources emailed to your inbox each morning