Map shows the area where parents are forced to spend over half their pay on childcare

The average full time childcare place for children under two in London costs an eye-watering £18,718 per year - more than half the median income in outer London

Parents of toddlers in London spend more than half of their pay on childcare costs on average, a new report has shown, hammering home the extortionate costs of nursery places.

The Coram Family and Childcare Survey 2023 put the average price of 50 hours a week at nursery for children under two in the UK at an eye-watering £13,695 per year.

In the capital, nursery prices are even higher, at £1,559.91 per month (£18,718.92 per year) for a child under two, equivalent to 52% of median full time pay in outer London.

The region spending the lowest percentage of their full time wage on childcare is the Midlands, where full time childcare for a child under two costs £1,052.13 a month, or 41% of median full time pay.

The report said there were "considerable rises" in childcare costs over the past decade, with England seeing the most substantial rise in the UK, and that there had been a 7% decline in the number of local authorities that had sufficient childcare places for children under two.

It also found that children with additional needs were hugely underserved by the early years sector – with just 18% of local authorities reporting they were able to provide sufficient childcare for children with disabilities.

The cost of childcare is one of the biggest barriers to parents returning to work after having children – with women taking on a disproportionate amount of childcare and unpaid labour. There are an estimated 890,000 women who have not returned to the workforce after having children due to childcare costs.

This week the Centre for Local Economic Strategies and the Women’s Budget Group published analysis showing childcare barriers were resulting in a loss of £90bn of gross value added to the economy.

And the childcare that is offered is often underfunded – a survey from the National Day Nurseries Association (NDNA) showed 98.4% of nurseries in England say their funding rates do not cover delivery costs.

As the government is said to be mulling an extension of its free hours programme, Labour's shadow education secretary Bridget Phillipson said: "More ‘free hours’ for parents, means more underfunded hours for nurseries, more costs piled on to providers struggling to deliver services as they are now, and more need for cross-subsidy.”

She added: “Adding in more free hours could see the Conservatives crash the childcare market, just like they crashed the economy.”

Britain's Shadow Secretary of State for Education Bridget Phillipson looks on, at Britain's Labour Party annual conference in Liverpool, Britain, September 28, 2022. REUTERS/Henry Nicholls
Shadow education secretary Bridget Phillipson criticised the Conservatives' plans for childcare. (Reuters)

Children’s minister Claire Coutinho hit back suggesting Labour had "no plan" on childcare, adding: "The Conservatives have ensured that every three- and four-year-old gets 15 hours of free childcare, with more support available for working families and the disadvantaged."

Ahead of chancellor Jeremy Hunt's spring budget next week, childcare campaigners have urged the government to act to fix the broken system that keeps numerous women out of the workplace.

The Trades Union Congress estimated 1.5 million women are kept from the workforce thanks to caregiving responsibilities – seven times more than the 230,000 men currently out of the workforce to provide care.

TUC general secretary Paul Nowak said: “We desperately need funded high-quality childcare for all families, free at the point of use, so women can stay in work once they have kids.

“Ministers must change the law so that every single job is advertised with the possible flexible options stated, and all workers must have the legal right to work flexibly from their first day in a job.”

LONDON, UNITED KINGDOM - OCTOBER 29: Hundreds of women, parents and young children, many dressed in Halloween attire take part in a âMarch of the Mummiesâ protest in Whitehall, London, Britain, on October 29, 2022, demanding rights for working mothers, reforms on childcare, parental leave and flexible working. The March for Mummies demonstration is taking place in 11 locations across the country, including the capital, organised by Pregnant Then Screwed, a charity that tackles discrimination against pregnant women in employment. (Photo by Dinendra Haria/Anadolu Agency via Getty Images)
Hundreds of women, parents and young children marched on Parliament in October demanding childcare reform. (Getty)

Joeli Brearley, founder of the charity Pregnant Then Screwed, which campaigns against the motherhood penalty, said: "Childcare and early years education has been neglected by this Government with devastating consequences for children and parents. Our research found that for three quarters of mothers it doesn’t make financial sense for them to work, with prices set to increase further, we will see more parents forced out of their jobs and into poverty.

"This isn’t a ‘mummy issue’ this is an issue for the whole of society – it contributes to the skills gap, it inhibits economic growth, and it ensures only the very wealthy can access early years education for their children thereby entrenching inequality."

More than 50,000 people have signed a letter that Pregnant Then Screwed delivered to prime minister Rishi Sunak on Thursday demanding greater investment in the early years sector.

Read more: Nationwide childcare shortage means disadvantaged children missing out - but costs continue to rise (Sky News, 4-min read)