Parents driven into debt as childcare costs soar in school holidays

Sarah Church, Labour Parliamentary Candidate for South Swindon, joined Mums in Westminster to offer support and to hear their stories.

Thousands of families on Universal Credit – the government’s flagship welfare reform programme – are being made to pay for childcare costs upfront, before waiting up to a month to be reimbursed. Increased costs during the school holidays mean parents are being forced to take out loans to cover the shortfall, or even give up work altogether. Hard pressed parents are having to find up to £800 extra to cover the cost of childcare this summer, driving many families into debt, new analysis by Save the Children reveals.

Yesterday seven mums, including mums from Swindon, who have been pushed into ‘childcare debt’ as a result of the policy joined Save the Children to lobby Parliament, demanding that changes are made to Universal Credit before it is rolled out nationwide.

Sarah Church, Labour Parliamentary Candidate for South Swindon, joined them in Westminster to offer support and to hear their stories. She said, “It makes no sense that childcare costs are keeping hardworking parents out of work. Universal Credit is meant to make work pay, but it’s having the opposite effect for parents on Universal Credit, predominantly mums. Having to pay huge costs upfront leaves these mums in debt, so they have my full support today calling for change.”

Childcare costs increase during the school holidays, when many parents rely on holiday clubs or childminders while they are at work. Even parents of pre-school-aged children are affected, as they lose their free childcare entitlement during the holidays. A parent with a three or four-year-old who usually receives 30 free hours of childcare in Swindon could face an increase of £620 during the summer holidays.

This is on top of other spikes in costs throughout the year, which leave parents constantly playing catch-up. The different number of days in each month, for example, has left some parents regularly having to substantially more to cover increases in their monthly bills, while others say their childcare providers expect them to pay for whole terms upfront – money they just don’t have.

Latest figures from the House of Commons Library show that nearly 8000 households in Swindon are currently claiming Universal Credit, of which around half have children, meaning that there are potentially 4000 families suffering in ‘childcare debt’.

As more than three-quarters (78%) of low-income families with young children in England have no savings, Save the Children warns that frequent spikes in childcare costs will push many of these families into the red, or block them from going back to work – the very opposite of what Universal Credit is designed to do.

Average monthly increases for three- and four-year-olds in the summer holidays in England by region:

Region Increase
East Midlands £535
East of England £619
Inner London £833
Outer London £749
North East £643
North West £529
South East £654
South West £620
West Midlands £645
Yorkshire and Humberside £554
England £631
  • The costs are based on a three- or four-year-old using 40 hours per week of childcare and refer to the difference between term-time (when they use the 30 hours entitlement and pay for 10 hours per week) and holidays (when they do not get 30 free hours so pay for 40 hours per week). Costs are based on average nursery costs and are calculated based on Coram Family and Childcare’s Childcare Survey 2019.
  • All figures come from a new report by Save the Children which analyses changes in childcare costs over the first four years of a child’s life, to assess key points at which childcare costs increase and what proportion of family income these increases represent.
  • Parents in England can claim some free hours of childcare, which vary depending on parents’ income, working status and the age of the child:
  • Families with a two-year-old on low incomes or receiving certain benefits are eligible for 15 hours per week of free childcare for 38 weeks of the year. Around 40% of families are eligible.
  • All families with a three- or four-year-old are eligible for 15 hours per week of free childcare for 38 weeks of the year.
  • Additionally, parents of three- or four-year olds who are earning at least the equivalent of 16 hours per week at the minimum wage, and up to £100,000 per year each, are eligible for an extra 15 hours of childcare for 38 weeks of the year.
  • Figures on the number of families claiming the childcare element under Universal Credit are based on Department for Work and Pensions figures on Universal Credit, available from Stat-Xplore.
  • The government’s flagship welfare reform programme will replace the Working Tax Credit – and several other benefits – with Universal Credit, which brings together six means-tested benefits together into a single, monthly payment for low-income households.
  • Universal Credit will retain a childcare element, reimbursing parents for up to 85% of their childcare costs, with similar monthly limits to those under the Working Tax Credit.
  • The childcare element – in both the Working Tax Credit and Universal Credit – is a way of reimbursing parents for out-of-pocket childcare costs, rather than providing childcare that is free or affordable at the point of use.