Childcare costs ‘keep many in poverty’

High childcare costs are making it impossible for some of the poorest families to work their way out of poverty, says the Barnardo's charity in a new report. Many parents in work gain little or nothing from doing extra hours, and may even be worse off – effectively paying for the privilege of working.

Key points

• Under universal credit, once childcare costs are factored in, lone parents with more than one pre-school child will face 'significant disincentives' to work enough hours to lift themselves out of poverty. For example, a lone parent with two children in London will pay £1.61 an hour more than they earn if they work 28 hours or more.
• Lone parents with only one pre-school child could face losing a significant proportion of any extra money they earn – acting as a 'substantial barrier' for families looking to work their way out of poverty. For each extra hour worked between 16 and 24, a lone parent on the minimum wage will potentially gain only £1.10.
• The report calls on the government to increase the proportion of childcare costs covered under the new universal credit system, to 80 per cent instead of 70.
• It also says the government should look at extending the free weekly 'early years' entitlement to education/childcare from 15 hours to 20 (or more) for disadvantaged children.

Source: Paying to Work: Childcare and Child Poverty, Barnardo's
Links: Report | Barnardos press release | BBC report