Campaigners criticise ‘disappointing’ funding rates for expanded childcare places

Childcare campaigners have expressed concern that the childcare rates announced by the Government today will not cover the full cost of places.

Children playing at nursery


Childcare campaigners have expressed disappointment over the increased funding rates for childcare places in England announced today by the Government, calling them a ‘gross understimate’ of what providers need to keep their doors open.

The Government says funding rates per child paid from September will increase from an average of £5.29 to £5.62 for three and four-year-olds and from an average of £6.00 to £7.95 for two-year-olds. The Women’s Budget Group, however, says that “to cover the true cost of provision we need at least £9.14 per hour for three and four year olds and £10.26 for two year olds”. It says this is based on the Government’s own projections.

The Government says the increase in funding will support the early years sector to deliver “the biggest investment in childcare ever” – the expansion of subsidised childcare places to children under three.

From April 2024, eligible working parents of two-year-olds will get a new offer of 15 free hours per week of free childcare. From September 2024, eligible parents will get 15 free hours from nine months until their children start school, and from September 2025, they will get 30 free hours from nine months until the start of school. The Government is consulting on how further funding for the year 2024-25 to reflect the expansion plan will be allocated. It also said it would increase the child-to-staff ratio which it said would save money, although the vast majority of childcare providers say it will make little difference and will reduce the quality of care.

The Women’s Budget Group says: “Without adequate support the childcare sustainability crisis will worsen and Government’s expansion plans will be at risk. We need system reform, highly qualified and well-paid staff with low child-to-staff ratios to ensure the best quality of care and education.”

Since the Budget announcement, childcare campaigners have been warning about the danger of expanding places for parents if government money does not cover the full cost of the place.  There have been mounting concerns about nursery closures, in large part because of the shortfall.

Neil Leitch, chief executive of the Early Years Alliance, said the rates announcement would do “little if anything to address the years of underfunding that has devastated England’s early years sector”.

He said: “Given that government’s own figures show that there is a £1.8bn shortfall in the existing three-and-four-year-old offer, how can anyone argue that a mere 6% increase in funding will come anywhere close to easing the pressures facing the sector, especially in the face of sky-high rates of inflation?

“Clearly, the government has grossly underestimated what early years providers need to both keep their doors open and continue to provide high-quality education and care. While we recognise that the plans for funding the new one- and two-year-old offers have yet to be confirmed, the fact is that funding must be adequate across the whole early years system for the sector to be able to remain sustainable, and from today’s announcement, it’s clear that this simply isn’t the case.

“Simply put, today marks yet another disappointment for the early years sector, and for parents hoping to be able to access affordable early years provision for their children in the coming year and beyond.”

Joeli Brearley, CEO and founder of Pregnant Then Screwed, added: “The Government is knowingly underfunding the 3-4 year old entitlement and has been for years. This £204 million injection is a fraction of the £1.8 billion that the sector needs to be funded adequately and sustainably. If the Government is serious about increasing capacity to fulfill the pledge made in the spring budget then we need to get the existing funding correct today. Without adequate funding more providers will close and it will be a case of too little too late.”

The Government also announced that it will work with 16 local authorities on early delivery of plans for universal wraparound care from 8am to 6pm for primary schoolchildren in England. The Government is allocating £289 million in funding to all local authorities from January 2024 to support wraparound care from September 2024. Some of the pilot areas are expected to roll out the programme from summer 2024.

*Early Years Alliance has launched two parallel surveys on the implications of the Government’s childcare offer – one for providers and one for parents.  The provider survey can be accessed here and the parent survey, here 


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