Parents facing debt problems due to childcare costs

A new survey has revealed that parents from some of the UK’s poorest families may be facing severe debt problems in order to afford rising childcare costs.

The survey, conducted by Save the Children and the Daycare Trust, involved questioning a total of 4,359 parents on childcare costs and general household finances.

The findings revealed that nearly a quarter of parents admitted that the cost of childcare has landed them with debt problems. Other results from the survey showed that 58 per cent of parents questioned had cut their spending on essentials such as heating, clothing and other bills. Meanwhile, four out of ten parents said that they spent nearly as much on childcare as they did on their rent or mortgage.

The survey focused on the differences in spending and debt problems between poorer families and those earning more than £30,000. Of those included in the survey, around 250 brought in an income of £12,000 or less a year. It was found that:

58 per cent of poorer families believed they were no better off working and paying for childcare, compared to 19 per cent on higher income families who shared this view.47 per cent had made cutbacks to the amount of after-school activities their children participated in, compared to 22 per cent of higher income households.61 per cent of low-income families admitted they were struggling to afford childcare. Just 37 per cent of higher earners also admitted this.

Kate Groucutt, from the Daycare Trust, said:

“Our research shows that childcare costs have risen every year for the last 10 years.

“This, combined with the recent cuts to the childcare element of working tax credits, means that the financial burden on parents is greater than ever.”

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Insolvency Service Warns consumers about wedding costs

by Nazma Noor on February 23rd, 2011

The Insolvency Service has recently issued a warning to couples planning their weddings this year – ensure that wedding suppliers are financially stable.

Weddings can be costly and if you’re on a tight budget the last thing you need is one of your wedding suppliers disappearing with your deposit.

A recent example of this happening is Anouska Antonia Semp, the 35 year-old former director of Avorio, a Sheffield-based bridalwear retail company. On 25 January 2011, she was declared bankrupt at Barnsley County Court.

Similarly, another bridal wear shop in Peterborough, Perfections, had one of their business partners file for bankruptcy this year. The landlord of the premises they rented sealed the doors and withheld stock in lieu of outstanding rent payments. As part of the initial investigation by the local Official Receiver(the government officer responsible for investigating financial failure) it was found that the shop had taken more than 80 deposits of around £300 each on wedding dresses. The brides, being unsecured creditors, are now unlikely to receive the wedding dresses they ordered.

It’s not just bridalwear shops you need to be wary of, in August 2010 Peter Gelardi and Pepita Diamand, directors of Wrapit PLC, a failed wedding gift company, were disqualified from acting as company directors for a total of 15 years when an Insolvency Service investigation found they had continued to take payments from customers of at least £872,000 when they knew the company was insolvent. Wrapit’s accounts showed the company had never made a profit and when it collapsed in 2008 there were 72,000 undelivered wedding gifts for which the company owed over £4 million.

The Insolvency Service has advised anybody planning their wedding this year to make a few simple checks before paying deposits or entering into a contract with a wedding supplier or venue. Below are the checks and how you can make them:

You can check if a director is subject to a bankruptcy order or has been disqualified from the world of business, on the Insolvency Servuce website database here: Disqualified Directors Search.

Again, this can be checked online for free and more detailed information can be accessed at a charge of £1. You can check for this information on the Companies House website.

If you’re looking for some tips for planning a budget wedding, see the blog we wrote about this last year: Weddings and debt, two things that always go hand in hand? and if you’re in an IVA and want to find out how getting married will affect your arrangement, read our blog about this here: Marriage, Divorce and Debts.

Do you have any tips for planning a wedding, whether they be about how to save or how to protect yourself from financially unstable suppliers? Leave a comment below and share your views now!

By Nazma Noor and is filed under Managing Your Money.
Tagged with: debt, insolvency, shopping, weddings.
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Rising childcare costs and government cuts heap pressure on working families

Low-income families and working women are being priced out of nurseries and forced out of their jobs as childcare costs rise twice as fast as wages.

A survey by the Daycare Trust, the national childcare charity, found that while pay rose 2.1% over the past year, the cost of a nursery place for a child aged two or over increased by 4.8%.

London and the south-east saw the biggest price rises but the most expensive nursery in the survey was in the West Midlands charging £11 an hour. Parents needing 50 hours of childcare provision every week could pay more than £28,000 a year.

The increase in costs come as parents already struggling with rising prices and flat wages are faced with cuts to Sure Start centre funding and reductions in tax credit and child benefit payments.

Parents of young children now face an average annual bill of £5,028 for 25 hours of nursery care a week in England rising to as high as £6,164 in London. In the north-east, parents pay an average of £82.70 a week or £4,300 a year.

Anand Shukla, acting chief executive of the Daycare Trust, said: “When parents sit down to calculate their family finances and see childcare costs increasing far faster than their wages, it is no wonder they may think twice about the economic sense of staying in work. These high, rapidly rising costs are particularly significant given the number of people not receiving cost-of-living pay increases this year, the increase in VAT and rising costs of other household goods, particularly food and fuel.”

Shukla went on to say that the planned changes to tax credits and other benefits will mean that some families will be forced to find an extra £546 a year to cover their childcare bill: “Yet parents in the UK already spend an average of one third of their net income on childcare costs – more than in any other OECD country.”

Veronique Boisvert, a working mother with two children aged four and one, told the Independent: “Our childminder ups her prices every six months. They are all very expensive in our neighbourhood so we can’t shop around easily. We are at her mercy when it comes to price, yet we’re also dependent on her.

“Our income is above the threshold for tax credits, but we are not so rich that it doesn’t matter. Our monthly income does not cover all our expenses. We have some savings, but that isn’t a sustainable situation if the costs do not stabilise.”

Ryan Shorthouse, of the Social Market Foundation thinktank, said: “An increasingly qualified workforce has pushed costs for nurseries upwards, as has a focus on attracting even younger children, which require higher child to staff ratios. Parents also increasingly start their children’s schooling earlier and maintained nurseries attached to schools become more popular. At the same time, funding from local authorities has often been insubstantial. The result is rising costs.”

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Posted in: childcare,costs,families,Government,pressure,Rising,working

28 per cent of Britons can’t cover living costs

Wednesday 26th January 2011

Recent research released by The Co-Operative Insurance and the charity Shelter has revealed that 28 per cent of UK residents are struggling to earn enough money to meet their monthly outgoings.

The report shows that the increasing costs of rent, mortgage payments, bills and living expenses are leaving many with an average shortfall of £165 each month. Over 70 per cent are worried about their cash-flow.As living costs continue to increase, many households are sacrificing essentials such as housing insurance to keep their finances in the black. One in ten consumers admitted undervaluing their possessions to keep the cost of their home insurance premiums as low as possible, even though nearly 80 per cent admitted that they would be unable to replace lost or stolen items without it.Lee Mooney, head of home insurance at The Co-operative Insurance, said: "Although times are tight and the vast majority of people don't have spare cash, it is important that people prioritise what they need above what they want in the year ahead."“It’s worrying to see that such a high proportion of people don't think having home insurance is important, as without it they could be left open to serious risk and further unaffordable expenditure in the long run," he added.Campbell Robb, Shelter’s Chief Executive said: “Every day Shelter’s advice services are helping increasing numbers of people who are finding it difficult to manage their finances and keep a roof over their head.“The support Co-operative Insurance provides through our partnership is vital in making sure we reach as many people in need as possible and we are extremely grateful for their help.”
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