Women facing 'catch 22' situation over soaring childcare costs and falling maternity pay

·3 min read
Mother With Baby Working In Office At Home Looking At Laptop Childcare costs are putting huge pressure on family budgets at the same time as other living costs are shooting up.
Childcare costs are putting huge pressure on family budgets at the same time as other living costs are shooting up. Photo: Getty

Working mothers are being caught up in a “catch 22” situation due to the with soaring cost of childcare and statutory maternity pay falling in real value, according to new analysis by the Trades Union Congress (TUC).

The cost of childcare for parents with children under the age of two has risen by more than £2,000 a year since 2010, an increase of 44% amid the intensifying cost of living crisis.

Nursery fees for children under two have gone up by £185 a month — equivalent to £2,200 a year.

The average annual nursery bill for a family with a child under two was £7,212 in 2021, compared with £4,992 in 2010.

This means that the UK now has the second highest childcare costs among leading economies, according to data from intergovernmental organisation the Organisation for Economic Co-operation and Development (OECD).

A separate TUC poll found that that one in three (32%) working parents with pre-school children spend more than a third of their wages on childcare.

Read more: Number of people working from home triples since COVID pandemic

Parents with children under two have to work an average 9.4 hours a week just to be able to cover 25 hours per week of childcare at nursery, according to TUC estimates. This is up from 8.7 hours per week in 2010.

Mothers are stuck in a "catch-22" as the UK’s “miserly” rate of statutory maternity pay is putting financial pressure on women to return to work early leaving them to cope with soaring childcare costs.

Statutory maternity pay has fallen by 3% in real terms since 2010.

The value of statutory maternity pay was £151.97 a week in 2021/22 — a weekly real terms drop of £5 since 2010/11.

"After 39 weeks statutory maternity pay drops to nothing. This means that if a mum takes the full statutory maternity leave of 52 weeks, they're unpaid for the final 13 weeks," the TUC said.

The TUC is calling on the government to provide a cash boost for the childcare sector in order to give childcare workers better wages, and a long-term funding settlement to make sure that childcare is affordable and available for families to support working parents and help the sector recover from the COVID pandemic.

Read more: How to save money at the supermarket with picky kids

TUC general secretary Frances O’Grady said: “Childcare should be affordable for all. But parents are spending a massive chunk of their pay packets on childcare bills, while their wages stagnate.

“This is putting huge pressure on family budgets at the same time as other living costs are shooting up.

“New mums are caught in a catch 22. The UK’s miserly rate of statutory maternity pay means many are under financial pressure to return work early and are then at the mercy of sky-high childcare fees.

“We urgently need to get wages rising to stop households drowning in bills.”

Ellen Broome, managing director of charity Coram Family and Childcare, said: “Universal credit should be reformed so that parents, especially mothers, are not locked out of work or left financially worse off by working.

“Families are facing ever rising childcare costs and many are under intense financial pressure. We want the government to re-allocate the billions of pounds in underspend from the tax-free childcare scheme to ease the burden on low-income families."

Separate research from Credit Karma found that one in four (26%) women go into debt to cover maternity leave, averaging £2,800 in borrowing — a £560 increase compared to 2018.

Women typically take two years and three months to recover financially after maternity leave, according to the research.

Watch: How to save money on a low income

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