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Parents offered more free childcare, but how do costs in the UK compare to the rest of the world?

How does the UK's childcare costs compare to the rest of the world. (Getty Images)
How does the UK's childcare costs compare to the rest of the world? (Getty Images)

Words: Felicity Hannah

Parents will soon be getting some much-needed help with their childcare costs, after the Chancellor has announced an expansion of free childcare for one and two-year-olds in this afternoon’s Budget.

The £4bn plan will provide an extra 30 hours a week of childcare for parents in England with children in that age group and increased funding for the current childcare programme for three-year-olds.

Families with children aged one and two do not currently receive support after parental leave ends and before free nursery hours are offered for three and four-year-olds.

The move comes amid ongoing concerns about the cost of childcare because while no one said having kids was going to be cheap, parents-to-be probably weren't expecting to have to fork out quite so much of their hard-earned cash on childcare.

Turns out bringing up a child in the UK is an expensive business, particularly if you need or want to work, with a recent report revealing UK parents are spending more than two-thirds of their salaries on childcare, which for many means it is cheaper not to clock on at all.

From the cost of nursery or nannies for little ones, to the wrap-around care needed for older children via holiday and after-school clubs, paying for a child to be cared for can eat a big hole in earnings.

Throw two or more kids into the mix and it’s nearly impossible for some families to make the maths work.

And with the current cost of living crisis adding to the stress it's little wonder one in four parents have had to cut down on necessities such as food, heating or clothing to afford for their children to be looked after.

But, of course, not all childcare costs are created equal with many countries around the world getting a considerably better deal than British parents.

So, how exactly does the UK compare with the rest of the globe and what can be done about the rising costs?

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Childcare costs in the UK are putting a financial burden on parents. (Getty Images)
Childcare costs in the UK are putting a financial burden on parents. (Getty Images)

Average costs of childcare in the UK

While the amount parents are having to pay varies from setting to setting and the type of childcare required, an annual survey from the charity Coram Family and Childcare gives an idea of the cash mums and dads have been splashing to have their kids looked after.

Families needing full-time nursery care for a child under two spent a whopping £13,695 a year on average this year in Great Britain, or £285.31 a week.

Even parents only needing part-time nursery care for a child under two had to fork out an average of £7,134 (for 25 hours per week), which is £148.63 every single week.

The report says average costs have risen by 5.9% in the past year while the availability of places has also dropped.

Offering a teeny silver lining, the cost of childminders is slightly cheaper with 50 hours a week of childminder care for an under-two working out at £247.19 a week or £11,865 a year.

After-school clubs set British families back an average of £67.42 a week, or £2,629 a year during term time (39 weeks a year). Then, of course, there’s holiday cover with parents who need that kind of childcare typically splashing £148 a week when school’s out, including during the long summer break.

It's worth noting that prices in England are higher than in Scotland and Wales. And, of course, costs vary within each county too with some families in London having to spend £45 more a week on staff for their children than the British average.

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Childminder costs are slightly less than nursery costs in the UK. (Getty Images)
Childminder costs are slightly less than nursery costs in the UK. (Getty Images)

How do UK childcare costs compare with the rest of the world?

British parents currently wincing with recognition won't be surprised to hear that Britain, alongside Cyprus and the Czech Republic, ranks as one of the most expensive countries in terms of childcare.

The Organisation for Economic Cooperation and Development (OECD) looked at the cost of childcare among 40 different developed countries as a proportion of parental income and gave each country a ranking.

The findings compared the costs of two-parent households, both earning 67% of the average wage and with two children aged two and three, and found that in terms of affordability those three countries were the most expensive.

New Zealand was then found to be the fourth most expensive country for childcare, Ireland the fifth most pricey, the United States was sixth most expensive, followed by Switzerland and Australia. France was found to be in the middle cost range and Germany was by comparison, found to be the fifth cheapest.

At the other end of the scale, Estonia, Latvia and Italy all ranked as having the cheapest average costs.

A further report by Unicef, comparing the leave given to new parents, access to childcare, the quality of that childcare and its affordability ranks Luxembourg first, followed by Iceland, Sweden, Norway and Germany.

The UK comes 36th overall, and 35th if you measure it just on affordability. Canada came 21st for affordability, France came 25th, Ireland 33rd, Australia 34th and the US 38th.

The countries that scored top place for affordability were Malta, Italy and Chile, with Unicef reporting that these countries offer free childcare, explaining why they are at the top of the rankings on affordability.

But it’s important to note that they came 14th, 15th and 25th overall, when you take the quality of childcare and other factors into account, hinting that cost isn’t everything when it comes to care provision.

Watch: Nursery fees 'to rise by £1,000 this year' as childcare providers struggle with costs - forcing parents to quit work

British parents are also getting a bit of a raw deal in terms of how much they are paying in childcare as a percentage of their total income.

The Cost of Childcare Report from the team at money.co.uk identifies what percentage of parents' monthly and annual income will be spent on childcare for children aged 0-2, who may not be entitled to any government or additional funding in their home nation, as is the case for the majority of parents in the UK.

It found that Britain ranked in fifth spot with single parents spending around half their income on childcare costs and two-parent households spending around a quarter.

By comparison, a two-parent household in France would spend around 13% of their joint income on childcare, in Australia they would spend just under 15%, in the US 13% and in Canada 11% – whereas in Germany a double-parent household would only spend 6% of their income on childcare.

Mums and dads in Chile are spending the largest amount of their monthly salary on childcare (58.5%) – with single parents in the South American nation spending well over half of the average monthly income on full-time care, and two-parent households spending just under a third of their earnings.

The Dutch follow closely behind in second place, with single parents in the Netherlands also spending over half the average income on full-time childcare.

On the positive side – with high-quality childcare and long, government-funded paid parental leave, it comes as no surprise that Sweden leads the way as the most affordable country for childcare.

Working parents in Sweden are supported with a low-cost daycare rate of £5.75 a day, equating to a weekly cost of just £28.75, and a monthly cost of £114.99. Over the year, Swedish parents pay just £1,379.88 for childcare for under-two.

Read it and weep British parents.

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British parents have some of the most expensive childcare costs in the world. (Getty Images)
British parents have some of the most expensive childcare costs in the world. (Getty Images)

British parents are fighting back

We've already established that the UK is one of the world's most expensive countries for childcare, but, in further bad news, costs are expected to rise further.

Recent figures have suggested nurseries are expected to raise fees by up to £1,000 this year, heaping further financial pressure on already stretched parents.

But they don't plan to take the soaring costs lying down, with thousands of parents joining the March of the Mummies protest in October last year to demand reform to childcare, parental leave and flexible working.

The financial burden of childcare has seen 17% of parents leave their jobs while 62% have decided to work less hours, and it is mostly women who bear the brunt of childcare, according to research from Pregnant Then Screwed, the organisation behind the protest.

“Mothers from all over the UK have come together because enough is enough," says the charity founder Joeli Brearley.

"Data from the ONS shows that women of childbearing age are dropping like flies from the workforce. The childcare sector is in a mess; thousands of nurseries have collapsed this year alone. We have had enough.”

This is a view echoed in parenting forums across the UK. "This is why I gave up work," one Mumsnet user wrote in a post lamenting her childcare fees.

"It was not worth the cost and I was working for no extra money, just paying someone else to look after my children up to 10 hours a day. Financially, we were better off with me staying at home."

"The whole model is broken," agreed another user. "Childcare should be affordable on all wage levels."

Read more: Gender pay gap 'widest for women in their 50s'

Stock picture of the March of the Mummies protest on childcare in October 2022. (Getty Images)
In October 2022, thousands of parents took part in the March of the Mummies protest demanding reform on childcare. (Getty Images)

The future of childcare in the UK

So what does the government plan to do to help struggling parents?

There is some support available for eligible families, for instance, up to 30 hours per week of free childcare for three and four-year-olds in England during term-time, though many parents are only entitled to 15 hours per week, due to the salary threshold.

But in the Spring Budget the Chancellor announced the extension of the 30 hours free childcare to include one and two-year-olds in England.

Some two-year-olds, depending on their family circumstances, may also be eligible for 15 hours per week of free childcare. These schemes are for families living in England, and similar provision is available in Scotland and Wales.

There's also the Tax-Free Childcare scheme which can save parents up to £2,000 a year per child. Once you’ve signed up, you load money into an online wallet on the gov.uk website and pay your provider out of that.

For every £8 you put in, the state tops it up to £10, saving you 20% of your costs to a maximum of £2,000 a year, per child.

It's something, but there are still calls for further help.

One campaign group, which includes the National Day Nurseries Association (NDNA), the London Early Years Foundation (LEYF) and the Fatherhood Institute, have signed a letter to Rishi Sunak calling for radical change.

“The proportion of wages spent by British parents compared to French parents [on childcare] is more than double," they wrote. "It’s not uncommon for parents, especially in London and the south-east, to actually spend most of their income on childcare."

Jonathan Merry, CEO of MoneyTransfers, previously told Yahoo UK that the high cost of childcare is "a real burden for UK families”.

“It's no wonder that many parents are struggling to make ends meet," he said.