Childcare providers concerned about funding rates

Childcare providers say the rates Government will provide local authorities for childcare are too low with rises less than half the increase in the minimum wage.

Nursery worker with child


Childcare provider organisations have reacted with anger at the release of funding rates to local authorities for childcare.

The rates announced are the money that local authorities will receive to cover childcare support. The hourly rate it given to local authorities to fund subsidised childcare will be £11.22 for under twos, £8.28 for two-year-olds (up from £7.95) and £5.88 for three- and four-year-olds (up from £5.62).

The Department for Education said the rates reflect the increase in the National Living Wage from April 2024. It also announced that from January, eligible working parents of two-year-olds will be able to register to access 15 hours free childcare per week from April 2024. This is the first step in the gradual roll-out of the government’s childcare expansion plans. The recommended time to register is between mid-January and the end of February.

Purnima Tanuku, Chief Executive of National Day Nurseries Association (NDNA) said: “The Government has promised more funded childcare for parents, but today’s announcement shows they are not serious about paying a fair rate for high-quality early education and care.

“Their own policies of raising the national living and minimum wages will increase costs by at least 10%. Increasing rates by less than 5% only adds up to more early years settings closing and certainly will not help employers recruit and retain more talented people that our sector desperately needs.”

She was also critical of the rise in the Early Years Pupil Premium for disadvantaged children, which will go up by only 2p per hour or just over £11 a year.

Childcare providers say it is impossible to plan for the expansion of the Government’s childcare offer until they know what money they will get from local authorities.

Neil Leitch, CEO of the Early Years Alliance, said: “While any early years funding increases are, of course, welcome, the fact is that the additional support announced today is still likely to fall short of what the sector needs to successfully deliver the 30-hours-expansion in the long term.

“This is particularly true of three- and four-year-old offer, where funding rates – which have long been wholly inadequate  – remain incredibly low. This is likely to push settings who do not, or cannot, offer places to younger children into an incredibly precarious position, meaning that many will struggle to deliver early education and care without passing this funding shortfall onto parents in the form of higher fees.”

He added: “The policy is a perfect example of the ‘announce first, think later’ approach that government continues to take when it comes to early years. With the start of the expansion just months away, it remains to be seen whether there is any hope of this policy actually working in practice.”

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