Advice NI warns rising childcare costs may push parents into long-term debt

As summer approaches, the spotlight is once again on the financial strain childcare costs impose on families across Northern Ireland, and Advice NI warns that the real cost of childcare is the financial implications it presents, including long-term debt.

It follows the Executive’s decision to set aside £25m for childcare, which is just 6 per cent of the £400m needed to fully fund the long-overdue new childcare and early learning strategy, according to the education minister.

Recent data from Advice NI member, Employers For Childcare, revealed that in 2023 nearly 60 per cent of families resorted to credit cards, loans or savings to cover childcare expenses. The average weekly cost of a full-time childcare place last year was also £193 per child and has risen by 14 per cent since. This reliance on means other than income to pay for childcare highlights an urgent need for action and reform to mitigate the financial risks to households facing debt. According to Sinead Campbell, Head of Money, Debt, and Quality at Advice NI, calls to the helpline from families in need of support spike during this time of year, particularly as costs are increasing.

Sinead explains, “It’s alarming that 60 per cent of people are relying on credit and savings to pay for their childcare, a huge increase from 41 per cent in 2021. Debt due to poor childcare reform has a lasting impact on families for many years and can lead to a cycle of debt some many never escape. In addition to those with young non-school aged children struggling to pay high childcare costs, we are finding the school holiday period is a particularly challenging time for working parents, with many already struggling with the cost-of-living crisis.  We are also concerned that many working families migrating to Universal Credit from Tax Credits, may struggle to pay childcare costs and find themselves getting credit to absorb the cost until they receive their first benefit payment.

“Our debt advisers are acutely aware from calls with parents that they are taking on debt to cope – a burden that unfortunately doesn’t disappear when the school-term resumes. It’s important to highlight too that it’s no longer just single parents or low-income families, but increasingly more high earners are struggling to keep up with escalating costs and are falling into the cycle of debt. Action is needed now including short-term and long-term interventions to provide a lifeline for those struggling whilst trying to do the best for their children.”

Employers For Childcare’s 2023 NI Childcare Survey also revealed that at least 1 in 5 parents relied on an overdraft to pay their childcare bill and more than 1 in 10 used a credit card where the balance was not paid off in full the following month.

Marie Marin, Chief Executive at Employers For Childcare said, “Our most recent pulse survey reveals our current childcare infrastructure is in crisis. 73 per cent of providers have either already increased their fees this year, or are planning to do so by June, and nearly half describe their business state as ‘struggling’ or ‘distressed’. This translates into further concerns for already struggling families. In the absence of adequate government support, childcare providers are left with no choice but to pass on rising costs to families. While we recognise that Government is aware of the issue, urgent action is needed to address the affordability crisis facing parents and childcare providers.

“Access to affordable childcare underpins everything the new NI Executive seeks to achieve. Ministers made investment in childcare a priority when the Executive returned, but so far we have seen no tangible support delivered. Firstly, we need to see delivery of the promised short-term intervention to address the current crisis for parents and providers, but, alongside this, we need firm commitments on the timeline for the new Early Learning and Childcare Strategy. Parents, children and our childcare sector simply cannot afford to wait any longer”.

One family with two working parents commented on their experience whilst taking part in Employer for Childcare’s recent survey, they said, “We have spent £200,000 in the past 12 years on childcare to enable us both to work in jobs that are contributing to society.” Whilst another lone parent added, “Childcare is the single biggest stress factor for me and my friends who have children. There is practically no financial support. It is causing a career crisis for women and having a poor impact on mental and financial health.”

Since 2019, Advice NI and its members have helped over 19,000 people deal with £205.6m of debt.

Sinead concludes, “We’re seeing more families and households reach out than ever before. People who’ve never experienced debt before are struggling, and its important people realise that getting in touch early is crucial to try an alleviate the burden.”

Contact Advice NI by calling the Freephone helpline on 0800 915 4604 between 9am and 5pm Monday – Friday. Parents can also visit adviceni.net to use the Money Talks Hub which offers valuable online tools such as a budget planning tool to manage household spending and the Safe Food tool which provides advice for shopping on a budget.

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