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Parents driven into debt as childcare costs soar in school holidays

Save the Children, 3rd July 

Parents driven into debt as childcare costs soar in school holidays

  • Parents say they face debt or have to turn down work as childcare costs increase by up to £800 per month during school holidays
  • 30,000 families on Universal Credit already forced to pay huge ‘upfront’ childcare bills
  • Government urged to make changes before Universal Credit rolled out to 500,000 families

We have spokespeople and case studies available. For further information or interviews please contact Charlotte Rose on 07377074419 or email c.rose@savethechildren.org.uk

London, 3 July 2019 – Hard pressed parents are having to find up to £800 extra to cover the cost of childcare this summer, driving many families into debt, new analysis by Save the Children reveals.

Thousands of families on Universal Credit – the government’s flagship welfare reform programme – are being made to pay for childcare costs upfront, before waiting up to a month to be reimbursed. Increased costs during the school holidays mean parents are being forced to take out loans to cover the shortfall, or even give up work altogether.

Today, seven mums who have been pushed into ‘childcare debt’ as a result of the policy will join Save the Children to lobby Parliament, demanding that changes are made to Universal Credit before it is rolled out nationwide.

These self-proclaimed ‘mums on a mission’ will be calling on the government to pay childcare costs in advance – a solution which will cost no more than the current system and will transform the lives of low-income parents and their children.

Nichola, a single mum of one from Portslade, West Sussex, joined the campaign after she was forced to borrow from family and even resort to payday loans to cover childminder costs during the school holidays. She said:

“It’s enormous stress – you’re always on the back foot. Every six weeks there’s a half term. I’ve borrowed from my family to pay the last half term, and when I can’t come up with the extra money I’ve taken time off, but I’ve only got one week’s holiday left this year and there’s a six-week holiday coming up. How am I going to do this? This isn’t about the odd £50 – we’re potentially talking about having to find thousands.

Nichola works as a benefits adviser and recently moved jobs to increase her salary and working hours. But she has since had to reduce her hours because she can’t afford the cost of childcare.

“If I don’t do something I’m going to go under. I took this job because it was more hours and I thought I’d be better off. But it’s just not doable. The upfront costs have stopped me from working more hours.”

Childcare costs increase during the school holidays, when many parents rely on holiday clubs or childminders while they are at work. Even parents of pre-school-aged children are affected, as they lose their free childcare entitlement during the holidays. A parent with a three or four-year-old who usually receives 30 free hours of childcare could face an increase of between £530 to £832 during the summer holidays, depending on where they live.

This is on top of other spikes in costs throughout the year, which leave parents constantly playing catch-up. The different number of days in each month, for example, has left some parents regularly having to substantially more to cover increases in their monthly bills, while others say their childcare providers expect them to pay for whole terms upfront – money they just don’t have.

There are 30,000 parents in England currently getting support with childcare through Universal Credit. This is set to rise to half a million families when Universal Credit is eventually rolled out.

As more than three-quarters (78%) of low-income families with young children in England have no savings, Save the Children warns that frequent spikes in childcare costs will push many of these families into the red, or block them from going back to work – the very opposite of what Universal Credit is designed to do.

Martha Mackenzie, Save the Children’s Director of UK Poverty Policy, said:

It's simply not right that families are being driven into poverty and debt by soaring childcare costs. Parents tell us it feels as if the system is stacked against them. They rely on childcare to go to work but when the school holidays come around they find themselves faced with sky-high childcare bills they can’t afford. They are having to resort to desperate measures – cutting back on essentials, falling behind on bills or getting into debt – just to go to work.  

“Instead of setting families up to struggle, the government must change the system so that parents can get help with their childcare costs before they need to pay fees. This would make a massive difference to parents and children living in poverty -- and it wouldn’t cost more money.”

Universal Credit brings together six means-tested benefits into a single, monthly payment for low-income households. Under the current system, parents can make a claim for help with childcare costs in advance of paying nursery bills. Save the Children is calling for parents on Universal Credit to get the same help.

Martha Mackenzie said:

“Hundreds of thousands of families are set to start getting help with childcare through Universal Credit in the next few years. The government must solve this problem now before the number of families falling into debt spirals out of control.”




Average monthly increases for three- and four-year-olds in the summer holidays in England by region:




East Midlands 


East of England


Inner London


Outer London


North East


North West


South East


South West


West Midlands


Yorkshire and Humberside





  • The costs are based on a three- or four-year-old using 40 hours per week of childcare and refer to the difference between term-time (when they use the 30 hours entitlement and pay for 10 hours per week) and holidays (when they do not get 30 free hours so pay for 40 hours per week). Costs are based on average nursery costs and are calculated based on Coram Family and Childcare’s Childcare Survey 2019.
  • All figures come from a new report by Save the Children which analyses changes in childcare costs over the first four years of a child’s life, to assess key points at which childcare costs increase and what proportion of family income these increases represent.
  • Parents in England can claim some free hours of childcare, which vary depending on parents’ income, working status and the age of the child:
  • Families with a two-year-old on low incomes or receiving certain benefits are eligible for 15 hours per week of free childcare for 38 weeks of the year. Around 40% of families are eligible.
  • All families with a three- or four-year-old are eligible for 15 hours per week of free childcare for 38 weeks of the year.
  • Additionally, parents of three- or four-year olds who are earning at least the equivalent of 16 hours per week at the minimum wage, and up to £100,000 per year each, are eligible for an extra 15 hours of childcare for 38 weeks of the year.
  • Figures on the number of families claiming the childcare element under Universal Credit are based on Department for Work and Pensions figures on Universal Credit, available from Stat-Xplore
  • The government’s flagship welfare reform programme will replace the Working Tax Credit – and several other benefits – with Universal Credit, which brings together six means-tested benefits together into a single, monthly payment for low-income households.
  • Universal Credit will retain a childcare element, reimbursing parents for up to 85% of their childcare costs, with similar monthly limits to those under the Working Tax Credit.
  • The childcare element – in both the Working Tax Credit and Universal Credit – is a way of reimbursing parents for out-of-pocket childcare costs, rather than providing childcare that is free or affordable at the point of use. 

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