UK childcare is up to 3x the cost of other comparable European countries: We get taxed once on our income and once again on childcare expenses. Many parents cannot afford to work or add value to the economy because of it. We provide some facts and figure below and propose few solutions to help single mums, single dads and couples with kids:

Taxation on Childcare 
In France, up to 85% of your childcare is reimbursed from birth, in contrast to the UK where childcare support only starts at 3 years old and where you are expected to pay 20-40% tax/add-ons on the cost of childcare.
It is estimated that to have a child in Britain could cost up to 10 times more than in France, even though the adjusted net annual household income in the UK is ~$1000 lower than that France (source: OECD Better Life Index).

Parent’s mental health 
“For decades, scientists have found that people with children at home are significantly less happy than those without. More recent research, however, suggests [..] the “parent gap” in well-being is larger in the US and the UK than in most European countries, and it is non-existent in Finland, Denmark, Sweden, Norway, Spain and France – where the joys of parenthood outbalance the stresses.” [source: New Scientist]

The study is explained by variations in paid parental leave, flexible working hours, affordable childcare and holiday leave, which together reduce the potential for work-family conflict. In the UK, childcare cost and length of holidays make it very challenging for both parents to progress in their career. Whilst we have seen a strong push for equal opportunity and equal pay - the UK government has not taken any meaningful steps to create a path to enable both parents to remain in the workforce. According to the Family and Childcare trust it cost on average £138 per week in 2022 (£7k per year) to get a part time nursery place for a child under 2 years old whilst  the average net salary offered for a part time job is approx £12k- that is equivalent to working 1000 hours per year only to earn 5 gbp per hour.

Childcare sector post Brexit and covid 

To add to the problem, in England, it is estimated that at least 40% of local authorities do not have sufficient childcare for parents whilst private childcare providers struggled to keep their businesses afloat, after 2 years of covid and brexit, with many forced to put prices up,  increase their ratio of children per staff, and almost 94% reporting difficulties with hiring staff (with as much as 65% saying it is “very difficult”). With a point system that sets the floor at £25.6 k a year in addition to cost of visa and relocation - it is hard for employers to manoeuvre. 

Simple reforms seem obvious :

-creating a point based system that speaks to the childcare crisis

-a tax regime that doesn’t double tax parents:once to join the work force and once they get paid for working.

If we do nothing. Socio- Economic Impact

This is far from being a point in time problem as a decline in childbirth (replacement rates at 2.1) will cause a gap in labour force and increased cost to support ageing  population. “By 2035, there will be two working-age persons for every retired person (We Forum). This has profound implications for health care, government spending and tax revenues.” In addition to negatively impacting innovation, with a narrower brain pool. Up to £250 billion of new value  to the UK economy is foregone due to women being unable to start and scale new businesses at the same rate as UK men (HM Treasury).

Final words 

In order to encourage population and economic growth, government action (beyond migration) is needed to boost birth rates. Parents should not have to pay any tax on childcare, especially as they are expected to continue to pay the same  tax rate on their income despite their cost of living increasing after children. By taxing them aggressively for having children; we are pushing them out of the Labour market, sacrificing their well-being, the countries’ economic prosperity and the safety of our elderlies. Is it worth the money ?