Parents are Now Using Loans and Credit Cards to Pay Childcare Costs

Parents in the UK, specifically Northern Ireland are spending more than £6,000 per child, per year in nursery fees today. The latest statistics show that childcare costs for children under five years stand at £117 and parents are being forced to work less or take loans to be able to cope with childcare costs. More than half of all Northern Ireland parents say they rely on other family members and grandparents to help them with childcare issues.

What’s more is the £6,000 annual childcare cost per child, which represents approximately 25% of the standard salary of a Northern Ireland worker, can increase drastically to more than £8,000 for many parents per part-time place. According to a recent Belfast Telegraph interview involving two mothers, Alison Bingham from Belfast and Jennifer Burns from Glengormley, exorbitant childcare costs have made it impossible for the two mothers to consider having more children considering they now spend approximately £10,000 and £15,500 each, respectively. Alison and Jennifer have two children each.

Killick & Co. Survey

The most recent Killick & Co. annual childcare cost survey showed that more than 42% of mothers surveyed in Northern Ireland indicated a significant rise in childcare costs over the last two years. The Killick & Co. Survey also showed that 50% of those polled had reduced their work-hours by a day every week in the past 5 years due to childcare costs and a further 25% have cut down working hours by two days every week.

Besides affecting working hours, hefty childcare fees (which now take up to 33% of the total household income) are influencing most parents’ position on having more children. According to Svenja Keller, Wealth Planing head at Killik and Co., the findings show how people’s lifestyles have been forced to change because of family. For instance, women are being forced to work less than men.

Also, more Northern Ireland parents (over 61%) now rely on extended family members to assist with childcare. According to Keller, grandparents now bare the biggest burden of helping with childcare tasks as parents cope with childcare costs and work-life balance. Data from the survey shows that Northern Ireland childcare costs stand at £6,084 annually, per child compared to £5,044 and £5,772 in Scotland and Wales respectively.

Aoife Hamilton, the Employers For Childcare Policy & Information manager agrees with Keller’s sentiments that childcare costs have become burden on families. According to Hamilton, the childcare bill has surpassed the rent, mortgage, food, and energy bill, a trend which is shocking and needs immediate attention especially when 25% of parents are turning to credit cards, borrowing from friends and family or even taking out payday loans to cater for childcare expenses.

According to Hamilton, the effect isn’t just financial. Employers For Childcare research shows that childcare costs are influencing working patterns causing many parents to leave work and limit their career opportunities which is, in turn, contributing to stress and the overall well-being of many families.

Employers For Childcare has a family benefit advice service for working parents (Free helpline: 0800 028 3008) who want to get work or those keen on maximising their income/managing childcare costs. In 2017, the benefit advice service conducted 6,542 personalised calculations.

Case study one: East Belfast Couple: 40-year old Alison Bingham and 38-year old Engineer husband

The couple has two children, Anna aged 4.5 years and Hayley aged 2.5 years.

Alison and Richard earn a combined £75,000 per year and spend £9,984 on childcare. According to Alison, the couple uses both formal and informal childcare services. Hayley attends formal childcare 3-full days a week while Anna is there three times every week on part time basis. Their grandparents help out 2 days every week. Alison and her husband can’t afford to cut back working days so they have to foot the childcare bill. Things are however better, according to Alison since the total childcare cost last year was £13,500 given both children were in nursery three days a week. Besides cost, the constant drop-offs and pick-ups are stressful. Having more children is not an option.

Case study two: Glengormley couple; Health service admin Jennifer Burns, 39 years and civil servant husband Christopher 35 years

The couple has two children, Alex aged 5 years and Jake aged 2. The couple has an annual combined salary of £38,000. £15,500 goes to yearly childcare costs. Alex is in nursery 5 days every week (part-time) while Jake is there 5 days a week full-time. According to Jennifer, the couple gets tax credits which cater for approximately 52% of their total childcare costs but the remaining £600 that must be paid every month is higher than the couple’s mortgage.

According to the couple, working part-time isn’t an option. If it were not for tax credits, Jennifer admits she would be forced to work part-time. She agonises having to pay ninety pounds more than she earns per month so that someone else can look after her children when she is at work. Having more children is also unthinkable for this couple considering the increasing childcare costs and the fact that Jennifer hasn’t had a pay hike in 8 years.

Is the Company Director of Swift Money Limited.
He oversees all day to day operations of the company and actively participates in providing information regarding the payday/short term loan industry.

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