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 long-term 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 a childcare and early learning strategy, according to the education minister.

Recent data from Advice NI member, Employers for Childcare, revealed that nearly 60 per cent of family’s resort to credit cards and loans to cover childcare expenses, with the average weekly cost £157 per child. This reliance on credit 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 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 1 in 5 parents relied on an overdraft to pay their childcare bill and 1 in 10 used a credit card where the balance was not paid off in full the following month.

Employers for Childcare’s said, “Our most recent poll reveals our current childcare infrastructure is in crisis. 73 per cent of providers will either increase fees or are planning to do so by June this year, and nearly half describe their business state as 'struggling' or 'distressed’.

In the absence of adequate government support, providers are left with no choice but to pass on rising costs to hard-working parents. While we recognise that Government is aware of the issue, greater action is needed to provide a viable solution.

"Failure to invest in childcare means we will be letting down businesses and our economy when parents are unable to work and the government won't be able to deliver on any of its priorities, whether that's infrastructure, education or bringing down our waiting lists. We need to make sure it has the workforce to do so and that means childcare."

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 it’s 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.

ENDS

For further information contact:

Nikki McKeown

07599568814 | n.mckeown@navigatorblue.com