Childcare costs are taking a toll on living standards for low-income families, says UK charity

British workers on lower incomes are unable to afford a decent standard of living due to high childcare costs, according to a report from the Joseph Rowntree Foundation charity (JRF).

The 2016 edition of the JRF Minimum Income Standard report, which gauges what the public considers to be a necessary income for an acceptable living standard, indicates that a couple with two children would need to earn at least £18,900 each.

The report, compiled by researchers based at the Centre for Research in Social Policy, finds that a couple working full-time on the UK minimum wage would be £2,600 short of the minimum income standard (or 12%) after childcare is taken into account. Without childcare costs, the same couple would be able to meet the minimum standard.

The JRF notes that while the minimum wage in the UK has recently increased, this has been offset by cuts to in-work benefits and rising costs of childcare and other living expenses.

The charity is calling for the UK government to increase entitlement to free childcare; to make childcare entirely free to families on the lowest incomes; and to increase investment in childcare to 0.85% of GDP.

Julia Unwin, chief executive of JRF, commented that: “Childcare has become the one of the biggest barriers to reaching a decent living standard in modern Britain. Work should always be the best route to a better life, but these figures show that a comprehensive plan to bring down the high cost of childcare, and improve the returns from working more hours, is desperately needed.”

In her IZA World of Labor article on childcare choices and child development, Daniela Del Boca argues that making high-quality early childcare more available to low-income households can promote efficiency and reduce inequality. She recommends that: “generous parental leave policies as well as policies that promote affordable and high-quality formal childcare are likely to have a positive impact on children’s abilities and outcomes in the near and long term.”

The JRF report, A Minimum Income Standard for the UK in 2016, can be accessed here.

Related articles:
Childcare choices and child development by Daniela Del Boca
Childcare subsidy policy: What it can and cannot accomplish by Erdal Tekin
Do childcare policies increase maternal employment? by Daniela Vuri