Every parent knows bringing up a kid right now isn’t exactly easy on the bank balance – but a new report looking at the cost of raising children has revealed exactly how much parents are likely to spend up until their child reaches 18.
And it’s pretty damning stuff.
It nows costs over £150,000 for a couple and over £200,000 for a lone parent to raise a child until they’re 18, according to a report by Loughborough University on behalf of the Child Poverty Action Group.
And this is based on calculations made in April, before costs rose even more.
In fact, the report’s authors suggest the actual situation this winter “will be substantially worse” – even after taking account of the one-off cost of living support and the freezing of the energy cap.
In what will be unsurprising news to all parents everywhere, childcare has become an increasingly large component of the cost of raising a kid – particularly if parents want to work and are not fortunate enough to have unpaid family care available.
Since 2010, the average annual nursery bill for a family with a child under two has risen from £4,992 to an eye-watering £7,212 in 2021, according to data from the Trades Union Congress (TUC).
The latest report found this persistent rise in childcare costs over the past decade means that childcare now comprises around 60% of the lifetime cost of a child for a couple working full time.
In 2012, it was just 40%.
Even when you exclude rent and childcare, it costs nearly £70,000 for a couple and over £110,000 for a lone parent to raise a child.
The report’s findings “presents a daunting challenge to any family,” the authors wrote.
And for families not in work, the struggle is far worse as – for the first time – benefits cover less than half of what a family with two children requires in 2022.
Around the start of last decade, families could meet about two thirds of their needs through benefit income, according to the report.
But fast forward to 2022 and the loss of the benefits top-up combined with a failure to increase benefits in line with accelerating inflation has caused the scales to tip for the worst.
This year has seen by far “the biggest deterioration in families’ living standards” in the 10 years since the Cost of a Child studies began, said the report, as incomes have failed to keep up with rising costs.
The authors said it’s now “desperately urgent” to unfreeze or abolish the benefit cap “to avert severe and persistent hardship for hundreds of thousands of families”.
A spokesperson for the Department for Work and Pensions (DWP) tells HuffPost UK: “This government is determined to put the needs of the most vulnerable at the heart of everything we do, which is why we’ve delivered at least £1,200 of direct payments to families this year while also saving households an average of £700 this winter through our Energy Price Guarantee.
“As is the usual process, the Secretary of State is currently conducting his statutory annual review of benefits using the most recent prices and earnings indices available.”
Childcare is crippling parents
Perhaps unsurprisingly there is a huge chunk of the report which focuses on childcare.
A general pattern is that children become more expensive as they get older –due to needing more food, clothing, social participation and all the other extras teens incur – but when it comes to childcare, the reverse is true.
The main reason for this is the structure of the UK government’s early years subsidy, says the report.
For children aged 0-1, no help is available, with families having to bear the full cost.
For some two-year-olds and all three- and four-year-olds, there is an early years subsidy representing up to 30 hours a week of free childcare.
When children then reach school age, childcare is only really needed before and after school.
The most expensive age for childcare is the period before a child’s first birthday, with the costs often being “prohibitively high” for low-income families.
It means parents tend to come out of work because financially it works out better to care for their own kids than go back and pay full-time childcare.
“The high and ever rising childcare component of the cost of a child is more often a work disincentive than a cost actually incurred,” says the report, “but by preventing families from earning, it still has a highly detrimental effect on their finances.”
In July, the UK government set out new plans to “ensure high-quality and affordable childcare is accessible to all” by opening up the childminder market and proposing to change staff-to-child ratios so that a nursery staff member can look after up to five two-year-olds (rather than the current allowance of four).
But at the time, those working in the industry – which is already facing extreme recruitment and retention challenges – said piling on further stress to nursery staff through staff-to-child ratios isn’t the answer.