As part of its response to the cost of living crisis, the government has identified childcare costs as an area it wants to address. New analysis from IFS examines how much families with young children are paying for formal childcare in England.
A key finding is that more than half of families with pre-school-aged children pay nothing in childcare fees. Greater support with childcare costs could help these families use more formal childcare, but will do nothing to ease existing pressures on their budgets.
However, some families face childcare bills that are high in comparison with their earnings. A quarter of families earning between £20,000 and £30,000 a year with a 1- or 2-year-old in formal childcare spent more than £100 a week on childcare fees for that child – more than 17% of their pre-tax income. Those with several young children could spend much more each week.
