Childcare in London is a third more expensive than in the rest of the UK, research shows

Caring for children Costs in London are up to a third higher than in the rest of the UK, with severe staff shortages and a sharp rise in the cost of living, the study found.

A report by the London Assembly's economic committee shows that London has the most expensive childcare costs in a country with low pressure, parents have to fork out 25 to 33 percent more in the capital.

The researchers warned that the higher costs meant that it did not make financial sense for some fathers to work and that this was having a negative impact on women's careers as well as the London economy.

It comes after recent research by the Center for Progressive Policy found that London's economy is losing around £5 billion a year due to the high cost of childcare and a lack of places.

The study found that between £27 billion and £38 billion could be added to the economy every year if mothers could work the hours they are deprived of due to a lack of childcare.

Ben Franklin of the Center for Progressive Politics previously estimated that the findings amounted to “around £5bn a year in lost output for the London economy”.

The problems plaguing London's childcare sector could get worse, the London Assembly's economy committee has said Chancellor Jeremy Hunt's new free childcare policywarning that nurseries and childcare providers may not be able to cope with the surge in demand caused by its new measures.

Mr Hunt announced a major expansion of free childcare to woo voters last year when workers with eligible two-year-olds were told they could claim 15 hours of free childcare a week for 38 weeks. While from September 2025, working parents with children under the age of five will be able to claim 30 hours of free childcare for 38 weeks a year.

But a new report shows that Londoners not only face skyrocketing childcare costs, but a shortage of childcare places in general – parents living in the capital are more likely to struggle to find places for their children, than in other parts of England.

Researchers warn that the shortage of daycare centers is particularly negative for parents of children with disabilities or special educational needs, or for parents who do not work regular hours.

Marina Ahmad, chair of the economy committee, said: “Our city is becoming increasingly unaffordable for families to live in. High childcare costs and other huge costs such as housing are pushing family budgets to the limit.”

Ms Ahmed, a London MP, warned that “the sharp increase in costs is causing serious concern among parents, who are worried about their ability to save and provide, and impact on important life decisions such as whether to have more children”.

She said that unless new measures are taken to tackle the problem, more families will be forced out of London.

It comes afterThe Independent last month it was revealed that thousands of nurseries had closed due to a staffing crisis, sparking fears that the government's pledge to expand free childcare was “doomed to fail”.

The Independent also showed expert warnings that Mr Hunt's childcare pledge in the Budget was rapid unraveling amid the “chaos” over funding mechanisms. Some have warned that the sector has not received enough money or support to fulfill its promise by April.

A new report says there has been a significant fall in the number of nannies in England, but London has seen the biggest drop.

Childcare providers tend to pay more in wages, rent or mortgages in the capital than in other parts of the country, the researchers said.

The report makes a number of recommendations, including a call for ministers to review funding rates in London's right to early education to ensure they reflect the true cost of providing quality childcare.

Joeli Brearley, founder and chief executive of Pregnant Then Screwed, said: “A big issue with childcare in London is affordability – it's very difficult for parents to find a place, so much so that demand for nannies in London is skyrocketing and we're hearing from parents who who say they're trying to catch a babysitter on the school playground.'

She attributed the shortage of nursery staff to low wages across the childcare sector, but explained that this was compounded by “the added challenge of the higher cost of living in the capital”.

Ms Brearley added: “With families unable to work without childcare, the lack of availability means that the percentage of employed mothers in London is lower compared to the rest of the UK. Which of course contributes to a wider gender pay gap in London and also contributes to higher levels of child poverty.'

Neil Leitch, chief executive of the Early Years Alliance, said: “Of course, while it is clear that the capital is at the cutting edge of childcare and early years, we must not forget that providers in the rest of the country are also struggling with the same issues.”

The Confederation of British Industry has estimated that implementing the government's childcare plans will cost £8.9bn, rather than the £4bn ministers have earmarked for more places.

The press secretary of the Department of Education has been contacted for comment.