The cost of children... before you have children

Some random child found on the internet. It is legal. Apparently. Ask Google Images if you have a problem.

Disclaimer: This is not a discourse on the fecundity or infecundity (if there is such a word) of the Old Mermedonian household. Any questions to that effect will be ignored, as will the person asking.

It has become clear from a raft of press releases and conversations with mothers and expectant friends that the cost of children begins long before the patter of tiny feet is heard.

Suppose a couple is starting to try for the first time. There is a host of expenses to pay long before there is any positive news to tell the family. This includes:

1. Folic acid (the government insists that all women trying to conceive should take this supplement daily)
2. Ovulation sticks (to check which days of the month are prime baby-making time) - these can cost £30 for the digital ones and even Boots' own (by which many women swear) cost £18
3. Male and Female dietary supplements 
4. Pregnancy test kits - some of these are more than £20
5. Books on ‘how to’ (if you want to avoid those ghastly internet forums, which either ratchet up your hopes so tremendously you think every tiny muscle twinge is a batch of triplets, or which spin such tales of doom and disaster you are sure you will never have a child).
6. Different foodstuff if your diet had not been healthy or enriched enough.
7. Alcohol to get your significant other in the mood. Not too much, because that becomes illegal pretty quickly. I know, it is a difficult line to tread.

Then supposing a couple is not successful and, after myriad tests, they are within the 30% ‘unexplained infertility’ group in the UK, then IVF is usually the next step on the road to parenthood.

I was talking with a mother yesterday whose first child was conceived through IVF. While most people will be able to get one round of IVF on the NHS, it does cost £5,000 a pop (unfortunate phrase, sorry). This is accompanied often by prescription tablets (for which most people have to pay at least £8.50, the standard cost of prescriptions) and a spate of hospital visits and days off work.

However, if one round of IVF does not do it, the next round will cost a couple £5,000 out of their income/savings. A series of articles on IVF by The Telegraph and The Daily Mail last year told sad tales of many women paying £10,000, £17,000 or more because of repeat, unsuccessful IVF treatment. Many of these women got into serious debt because of this. It is heartbreaking.

If the IVF is successful, there are many other things to consider:

Home refurbishment – kitting out a nursery for the first time can cost £1050, a survey from online forum Made For Mums calculated last year. This includes decoration, furniture, light-blocking curtains and carpeting, as well as toys and storage.

Clothes for the baby (even assuming some hand-me-downs from friends or family) – an article from Investopedia, a great site for people wanting to learn about finance, claimed the average cost for baby clothes is about $60 (£32) a month for the first year.

Toiletries. Also according to Investopedia, the average child will use more than 2,700 nappies in the first year alone, which can add up to more than $550 (£230), not to mention baby wipes, baby oil, cotton wool, baby lotion, special shampoos, etc.

Thanks to legislation, the must-haves also now include baby seat and child seats for the car, in addition to prams, carriers and whatever those back-packy things are called into which dads stick babies so their arms and legs dangle out like a bug on a pin. The latter look really cool by the way, and whoever invented those was a genius.

Already the costs of simply preparing for a child have ballooned.

What happens when the child is born? I am assuming that most companies in the UK offer good maternity cover, but I know of so few that would allow the primary care giver (usually the mother but not necessarily so) to continue contributing to a pension. So there are several months – perhaps even up to a year – where one person is not contributing or receiving employer contributions into a pension. Any spare cash is going on food for the baby, clothes for the baby, nappies for the baby. How are parents expected to save for when their darling has flown the nest?

And when people do return to work – the Office for National Statistic’s 2011 census showed that more couples were both returning to work post-Crisis than before, simply to meet the costs of mortgage, travel, utility and food bills – the cost of childcare is becoming prohibitive.

One mother of two young girls told me her child care a month was £900, and that was not full-time child care, thanks to the help of parents. Another woman I spoke to pays more than £1000 a month full time for two children, and that’s not even in central London.

All this, of course, is before Nursery and School costs – trips, food, uniform, after-hours activities, etc etc. No wonder providers have been pushing child savings schemes such as the Junior Isa or children’s bonds to help parents meet the future cost of raising children.

With the Conservative government biting at people’s personal tax credits and benefits, it will not be long before more couples decide that having children is a financial decision they just cannot afford to make – a crying shame and an indictment on this so-called ‘family friendly’, ‘British Values’ government.

Even Tory-leaning think-tank the Institute for Economic Affairs has called the rising cost of childcare a disgrace.

Recently, Mark Littlewood, the director-general of the IEA, said: “Heavy-handed government regulation is making childcare more and more expensive in the UK.
“Politicians need to wake up to the root cause behind the high cost of childcare. Rather than channelling more money into the industry, the government should do-away with some existing regulations and stop trying to formalise all childcare.

“Onerous red tape in the form of qualifications and staff-to-children ratios, combined with an increasing emphasis on nursery becoming a form of pre-primary education have drastically pushed up the cost of caring for a child”.

As regular readers of this blog will know, I seldom agree with Mr Littlewood, but on this occasion I raise to him an invisible glass of invisible double scotch, and said ‘hear, hear’.

I admire the many families that manage to live within their means. Usually this is because the adults go without things they want or need in order to give the best start in life to their children. I also sympathise with those families who have gone into debt – whether to pay for IVF or healthcare for their small children. The lack of resources given by this government to the NHS is appalling. Parents and would-be parents do not have the readies to throw into what is, by now, a well-researched, well-practiced medicinal procedure. It should not cost £5,000 a pop for IVF. The NHS should not be forced by central government into making cost decisions based on a woman’s age or social circumstance. It is appalling.

So what is the answer? Apart from lobbying government and pushing to save and support the NHS more, individuals can start to save more, well in advance of any familial decision. It could be wise to set up small investments as soon as you get married or start to cohabit, in expectation of expecting.

Even a few hundred pounds in a low-returning, readily accessible Cash Isa could be a huge boon to families struggling to meet the costs of starting a family. After the birth, it could be best to ask family and friends to help you with a Junior Isa or contributions to an investment fund established to help meet the plethora of interim costs between 0 and 18, rather than buy another set of babygrows. All these could be some partial solutions to this problem.

On a lighter note, perhaps the following from Scottish Friendly could suggest a solution: some basic child labour? Apparently, there is a growth of entrepreneurial children in the UK, with one in four under-18s earning £38 a month on average by working for people outside their immediate family. It's not quite illegal, so it seems.

According to the provider, this equates to about £1.8bn a year, garnered from doing chores such as gardening, helping older people with their technology problems, participating in online surveys, helping to create apps (clever clogs), washing cars and pet-sitting. Of course, you can’t send them down the mines or up chimneys now, as I have discovered recently, such a thing is frowned upon these days. However, perhaps you could help your young ones to help you help them… Just a thought?

Otherwise, I suggest a lower-cost option:

He has his father's eyes. And fur.

QUESTION: What money-saving ideas have you used/recommended to couples starting out en route to parenthood? It would be great to hear your hints and tips - please do use the comment section below and I'll follow this post up with them later on in the year.

In defence of Ed Miliband

Ed Miliband, Labour Leader

I can hardly believe I am doing this but I agree with Ed Miliband.

In a week where he has been lambasted by celebrities, the media and politicians of all flavours, it is harder to praise the man than to bury him.

My old debating coach used to tell me it is harder to stand up for an unpopular cause than to decry one, and as I have always relished a challenge, I am unafraid by what might follow.

Ed Miliband is right.

While Myleene Klass may claim that £2m will just about get you a garage in London, and the media may agree, I would like to ask the normal, working people of London and the South East whether they live in a £2m garage.

It is my experience - 15 years as a financial services journalist, not as a celebrity commentator who reads the papers occasionally and listens to BBC Radio 4 - that the majority of people live in homes worth far less.

The average house price in the South East, according to the latest data from the Office for National Statistics and the Halifax House Price index, is somewhere between the figures these bodies have provided of £485,000 and £355,630 respectively.

That's a far cry for £2m - a figure skewed by the media and celebrity-rich areas of Kensington, Kingston, Chelsea, Putney, the City, Canary Wharf penthouses, Wimbledon Village, Dulwich Village, some parts of Clapham and Islington, and some parts of Golders Green and Finchley.

For the rest of us oiks, who slum it out in Brixton, Streatham, Peckham, Lewisham, Mitcham, Morden, Hackney, Newham, Hammersmith, Walthamstow, Balham, Norwood, Norbury, Thornton Heath, Hackbridge, Camberwell, Elephant & Castle, New Cross Gate, Lewisham, etc etc etc, well house prices just ain't anywhere near £2m.

We'd be grateful for a £2m garage, sure, but we are normal people who like normal houses that we can afford to maintain. If we were so desperate to live in an area that only had £2m garages, then we'd need to be paid seven-figure sums to advertise clothing catalogues.

But we don't. We are nurses, teachers, shop workers, journalists, pencil-pushers, council workers, administrators, bus drivers and the self-employed.

According to data from the Council of Mortgage Lenders, these normal people here in London and the South East have an average loan size of less than £250,000. Here's some statistical data to stick it to the whinging rich who have actually NO idea what real people earn or experience.

"First-time buyers typically borrowed 3.90 times their gross income, more than the 3.83 in the previous quarter and the UK average of 3.46. The typical loan size for first-time buyers was £212,000 in the second quarter, up from £200,000 in the previous quarter. The typical gross income of a first-time buyer household was £55,000 compared to £52,500 in the first quarter.

"Due to higher house prices within London compared to the UK overall, there was a continued shift in the mix of properties bought by first-time buyers in London towards more expensive properties. In the second quarter, 63% of first-time buyers bought properties priced at more than £250k, up from 57% in the first quarter and 51% in the same period last year. This was significantly higher than the UK overall level of 17%."

Yes it is true that house prices are higher in London - but as with all data, this is skewed by the super-rich areas where a dog kennel costs £70,000. This is not the experience of the vast majority of the population, for whom a £2m mansion is far above what any length of inflation and upward pressure on house prices could hope to achieve. 

Even if my own five-bedroomed house were to show house price rises of 600 per cent in the next 50 years, it could not match the £2m mansion tax proposed by Labour.

Now I am not agreeing that it is a good policy. But it may be a way to show that Labour is getting back to its roots - tax the rich and give to the NHS (and yes, if you have a £2m house you are going to be more wealthy than the majority of the UK population. Get out of your cars and go have a look at some of the poorer neighbourhoods around you).

It may also be a way of raising some much-needed revenue to shore up our ever-flagging deficit. 

I've sat through Budgets and Autumn Statements which each year tell me how great the government has been in cutting the deficit and getting us out of a recession, how austerity has helped us get back on our feet. 

And each time the figures get smaller, the achievement gets narrower, the prospect of being a country with no debt gets further away. This is called clever accounting by some, or wishful thinking by others. 

A proposed £2m tax on property - a theory by the way - might be a very convenient political football for a party that is already taxing people in council houses and on the lowest earnings ladder.

These people fall below the £10,000 a year limit for auto-enrolment into a pension. They have no savings. 

They literally live in garages - prefabs and tiny homes run by councils. And if they should dare to have one extra bedroom - maybe a spare room, maybe a room that their family uses, or maybe a grandmother looks after her grandchildren at weekends - they get taxed.

Let's repeat this slowly so that people understand: 

Labour has proposed to explore a £2m mansion tax on the wealthiest sectors of society (sorry upper middle class, yes you are more privileged than you believe you are).

The Conservatives are forcing the poorest people in society, the financially vulnerable, the people relying on food banks, and often the least educated, out of their homes into smaller properties or taxing them for daring to have one more room than they need.

Instead of jumping on a fashionable bandwagon and slating the Labour leader, why not sit back and actually think about these things: 

Fairness
Justice
Social equality
Raising people out of poverty
Helping the excluded.

If you advocate any of these things, you cannot take anything the Tory party says to ridicule Ed Miliband seriously.

This is the Tory party that doesn't know whether or not, or how much, it will have to pay the EU. First it doesn't owe them, then it does, then it managed to halve it, then it managed to not halve it but in fact will repay it "at its own convenience".

So basically it worked out a debt repayment plan, just like many of the poorest people in the UK have to do daily just to get by.

Ed Miliband is right. The Labour Party have their party members' interests at heart. Their policies are getting back to the real everyday struggles of normal people, the people that the Coalition has forgotten. 

Think before you leap and end up alienating we people, the normal people, the average people. 

Because we are the voters, the majority of voters in the UK and we want someone who actually will represent us.