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Confusing and costly: Parent horror over rising childcare prices and patchy Government support revealed
14 February 2024
Three out of four (74%) parents have seen price increases from their childcare provider over the past year, according to new research from smart money app Plum*.
Parents of children under 5 are now spending substantially more to have their children looked after while they work, with 37% now spending more than £200 a week on childcare, up from 29% in January 2023**.
Today, more than two thirds (70%) say that the cost of childcare has affected how much they work, and more than one in three (35%) say it has put them off having another child completely, highlighting the huge impact that unaffordable childcare is having on both work and life choices.
Plum has been campaigning on behalf of parents since the start of 2023, with the aim of improving access to affordable childcare. This new research follows a similar poll from January 2023 to see whether the situation has improved for parents of young children, as well as analysing the reaction from parents to new policies around childcare.
New policies falling flat
The Government has promised more support for working parents, with 15 hours a week of free childcare planned to be rolled out to families of two year olds in April. However, the majority (57%) of parents still feel the Government needs to do more to help parents afford to go out and work. Just a quarter (27%) state that they will be better off with the new measures.
Meanwhile, one in five (21%) believe providers will not be able to meet demand at all. The research revealed stark concerns about the current level of staffing at childcare providers, with the majority (54%) expressing worries about this. 1 in 4 (24%) stated they were particularly concerned about staff/child ratios.
And more than two thirds (68%) are feeling confused about what support they will be entitled to.
Financial strain continues
Overall, parents continue to report intensifying financial pressure over the past year as childcare costs soar. This has led to difficult choices for households:
Commenting on the findings, Plum’s Head of Money, Rajan Lakhani, said: “Last February we launched a campaign for better financial support for parents struggling to afford childcare, having seen firsthand the impact it’s having on their financial resilience. We welcomed the Government’s announcement that 15 hours free childcare for two year olds will be rolled out to working parents from April. However, we warned at the time that extra funding for providers, as well as increased incentives to recruit childcare professionals, would be needed to make this policy have a real positive impact on working families.”
“As the results of our research show, the Government needs to do more to reassure and support parents. Over the last year family finances have been put under extreme strain as providers have been forced to increase their fees. While we’re a few weeks away from the phased roll out of additional childcare support, last month’s stress over tax codes for parents of two year olds has further added to the confusion and mistrust. It’s no surprise that there are widespread fears that providers will struggle to cope with the upcoming changes – which will have devastating consequences for families up and down the country.”
Plum Open Letter
In answer to parent concerns, Plum has published its Open Letter to the Government, outlining the company's proposals for improved access to affordable childcare signed by:
Rajan Lakhani adds: “In our open letter we’re calling for strong measures to tackle parental anxiety over childcare, including increased funding and better communication with parents. This is critical to boosting productivity in this country, as well as improving the wellbeing of families across the country. The failure to deliver properly on childcare is an own goal both morally and economically, and is holding the country back. We hope the Government is listening.”
-ENDS-
*Plum/Research Without Borders, Nov 2023 (details below)
**Plum conducted separate research with Research Without Borders with the same questions in Jan 2023
Plum is the ultimate smart money app, with a mission to maximise wealth for all. Founded in 2016 by Victor Trokoudes (ex-Wise), Plum automates parts of personal finance that people find difficult or don’t have time for, with effortless saving, empowered spending and accessible investing. Plum has helped over 1.8 million customers across Europe do more with their money, with more than £2 billion set aside via the app. Plum was awarded the Best Personal Finance App at the British Bank Awards 2023 and was named one of the fastest-growing companies in the UK by the Deloitte Technology Fast 50 2023. Plum is headquartered in London, UK, and has offices in Athens, Greece and Nicosia, Cyprus.