6 ways to save money on the huge rises in childcare and after-school club costs

Childcare and financial experts tell Lisa Salmon the best ways for parents to keep costs down.

Like everything else, the cost of childcare has increased massively, making some parents fear it’s not worth them working any more.

A new analysis by Labour has found the cost of after-school clubs for primary-age children has risen by more than £800 a year since 2010, increasing 1.5 times faster than other items, such as food and clothing, and meaning the average family is now spending more on after-school clubs than on their weekly food shop.

According to Coram Family and Childcare, which works to make sure children have access to high-quality childcare, the huge rise in the average cost of childcare in the UK means a part-time nursery place (25 hours) for a child under two now costs 4% more than a year ago. For a child aged two, it costs 5% more.

The charity’s head, Megan Jarvie, says: “A lot of parents, particularly mothers, find it’s not worth them working – it’s too expensive and stressful.

“There’s not really an easy answer to this – the costs are really high and families do really struggle. The key thing families can do is to get as much information as possible about what’s out there.”

Here, Jarvie, and personal finance expert Rajan Lakhani, from the smart money app Plum, give their advice on how to make childcare as cheap as possible…

1. Speak to your local council

Jarvie says there may be good, affordable childcare available in your local area, and the best way to find out is by contacting your council. “Speak to your council Family Information Service,” she advises. “They’ll be able to tell you what’s on offer locally, including childcare that might be a slightly lower cost.”

She also suggests trying Holiday Activities and Food schemes. “Although their main purpose is tackling holiday hunger, in some areas, they’re more multi-purpose and provide information about good low-cost childcare as well. It’s different in different areas, and the council Family Information Service should be able to give more details about local provision.”

2. Make sure you’re getting the right financial support

Another key point is for families to make sure they get as much financial support as possible, says Jarvie. “We know loads of families miss out on financial support. If parents are using Ofsted-registered childcare, they can claim tax-free childcare or Universal Credit to help pay. There’s quite low take-up with tax-free childcare, so it’s a nice one for families to find out about, because a lot of them don’t know about it already.”

Lakhani explains that tax-free childcare helps working families, including the self-employed, to pay childcare costs for childminders, nannies and after-school clubs, until their child is 11-years-old. He says the Government gives working parents with annual salaries up to £100,000 financial support worth £2 for every £8 paid for childcare, up to a maximum of £2,000 per child per year.

“You can receive up to £500 every three months for each child,” he says. “That goes up to £1,000 every three months, up to £4,000 a year, if your child is disabled.”

Lakhani says that if you’re eligible for Universal Credit, you can reclaim 85% of your childcare costs, worth up to £1,108 per month.

“Make sure you take advantage of all the tax breaks available to you as a parent,” he stresses. “These could make a very big difference, especially with energy bills set to rocket, and inflation already in double-digits.”

3. Take advantage of free childcare

Lakhani points out that the government offers 15 hours per week of free childcare for all three and four-year-olds, rising to 30 hours for working families, and 15 hours for disadvantaged two-year-olds.

4. Seek flexible working

One of the few positive legacies of the pandemic, says Lakhani, has been companies becoming more flexible about where people work from. Many employers will expect parents to have childcare in place during working hours, he explains, so school drop-offs and pick-ups will be easier if your child’s school is closer to home.

“Some employers have their own flexible working policy, so speak to your line manager or HR department,” he advises. “You may also be able to agree work start and finish times that suit you better, meaning you can look after your children immediately after school, rather than from the evening, when people typically finish work.”

5. Parent sharing

Parents can work together to share childcare, suggests Lakhani. “If you know someone with a schedule that fits in with your childcare needs – and vice-versa – and they live nearby, you could think about looking after each other’s children,” he says. “Given you’re not leaving your child with a trained professional, you need to make sure it’s someone you truly trust and have full confidence in.”

6. Make the jigsaw puzzle work

Jarvie says the reality for many families is that they have to just do whatever they can to make sure their children are looked after properly.

“Sometimes what parents do, particularly during the holidays, is take a bit of annual leave, use a bit of holiday club, a bit of grandparents, family and friends, and do a bit of a jigsaw puzzle and muddle through to try and make it work,” she explains. “That’s the reality of what people do, and it’s difficult.”

It is difficult, and all families are different, but there is help and support out there. Make sure you get what you’re entitled to.