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19 Jun 2015

Loughborough University research finds childcare costs push 130,000 children into poverty

130,000 UK children are pushed into poverty as working parents struggle to pay rising childcare costs, finds new research by Loughborough University.

Published today (Friday 19 June) by Gingerbread and the Child Poverty Action Group (CPAG), the research also found the risk of poverty increases by a third for children whose working parents pay for childcare (from 14.9 to 19.6%) [1].

Gingerbread and CPAG warn that families struggling to make work pay have a long wait ahead for extra childcare support pledged by the Government, while costs continue to rise sharply above wages.  In the last five years, nursery fees for under-twos have risen by 33% [2].  One in five children with at least one working parent is growing up in poverty [3].

The Government has set out plans to pay up to 85% of childcare costs for low-income families on universal credit from next spring, an increase from the current 70% available through tax credits. But with universal credit’s rollout to families frozen for a year [4] and full rollout delayed until 2019 [5], this extra support is years away for many families.

Donald Hirsch, co-author of study and Director of the University’s Centre for Research in Social Policy said: “The high and rising cost of childcare remains a huge barrier in reducing child poverty.  Our investigation shows that families that take on more work to make ends meet can be kept in poverty once you take their additional childcare expenses into account.

“But we also found that relatively few families do take on this cost, meaning that those unable to find unpaid arrangements are limited in how much they can work, and this too damages family income.  It’s good news that the Government is increasing support for childcare, but we will be watching closely to monitor whether this is in a form that enables more working families to take it up.”

Gingerbread and CPAG are today calling on the Chancellor to ensure that universal credit delays don’t stop poor working families from accessing the 85% of childcare support the Government pledged.  The charities argue that by introducing the extra support through tax credits, hundreds of thousands of families will be able to start making work pay.

Gingerbread Chief Executive Fiona Weir said: “Any family knows that childcare is incredibly expensive, but this research proves that the costs are having a very real and damaging effect on the poorest families.  Government proposals will go a long way to helping families with childcare costs – but support is years away from helping many poor families who simply can’t afford to wait.”

Chief Executive of Child Poverty Action Group, Alison Garnham said: “Despite recent progress, childcare costs still make it hard for low income working families to enter or progress in paid work.  And children in these families still face the day to day reality of living in poverty because of it.  The extra support with childcare costs is needed now so families don’t have to lose out because universal credit is delayed. The Chancellor must act now to make work a route out of poverty and deliver on his government’s pledges.”

It is also unclear when 30 hours of free childcare a week for three and four year olds will be available and the Government has indicated that there is much work to be done before it will be available to families [6].

The charities’ call comes ahead of the latest child poverty statistics, due to be published on Thursday next week (25 June) and the Budget on 8 July.


Notes for editors

Article reference number: PR 15/118

[1] Hirsch, D. and Valadez, L. (2015) How much does the official measure of child poverty under-estimate its extent by failing to take account of childcare costs? Loughborough: Centre for Research in Social Policy.

[2] Rutter, R. (2015) Childcare cost survey 2015, London: Family and Childcare Trust.

[3] DWP (2014) Households below average income (HBAI): 1994/95 to 2012/13.

[4] DWP update to local authorities: “No sites that are going live as part of 2015/16 national rollout will take claims for couples and/or families.” Source: DWP (2015) Housing Benefit Direct, issue 157.

[5] December 2019 is the DWP’s planned date for completing the transfer of 93 per cent of claimants on to universal credit. Source: National Audit Office (2014) Universal Credit: progress update

[6] David Cameron said it would "take time" to get the policy right. DWP Minister Priti Patel is launching a task force to look at the funding model. Source: BBC News, 1 June 2015. There is no published timetable for rollout. The policy will offer 30 free hours of childcare a week for working parents, 38 weeks of the year, matching school holidays.

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It has been awarded five stars in the independent QS Stars university rating scheme, putting it among the best universities in the world, and was named University of the Year in the What Uni Student Choice Awards 2015.Loughborough is consistently ranked in the top twenty of UK universities in the Times Higher Education’s ‘table of tables’ and is in the top 10 in England for research intensity. It was 2nd in the 2015 THE Student Experience Survey and was named Sports University of the Year 2013-14 by The Times and Sunday Times. In recognition of its contribution to the sector, Loughborough has been awarded seven Queen's Anniversary Prizes.

In 2015 the University will open an additional academic campus in London’s new innovation quarter. Loughborough University London, based on the Queen Elizabeth Olympic Park, will offer postgraduate and executive-level education, as well as research and enterprise opportunities.

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