Government announces below inflation increase in childcare funding

The average increase in funding for free childcare for three and four year olds will be 3.4%, according to the Government.


The Government has announced that local authorities will receive average funding increases of 3.4% for the three and four year olds’ free childcare entitlements and four per cent for the two year old entitlement over the next year – well below inflation.

In a statement on education funding for next year, the Government said pupil pupil premium funding in schools for disadvantaged children will rise by 5%, funding for children and young people with complex special educational needs and disabilities will increase by 10.6% and special schools and alternative provision will receive an average 3.4%per place in 2023-24.

It claims the increases, alongside capital funding for building work, mean school funding will be at its highest ever level in real terms per pupil, totalling £58.8 billion by 2024-25.

Inflation currently stands at 10.7%. Childcare providers have long argued that the amount the Government gives to subsidise its free childcare scheme does not cover the cost of places.

The increase in childcare funding comes as part of a change in the way the free places for three and four year olds and disadvantaged two year olds is calculated. Three and four year olds of working parents are entitled to up to 30 hours a week of free childcare during term time, if they meet the eligibility criteria. Disadvantaged two year olds are entitled to 15 hours of free childcare, depending on eligibility.

Neil Leitch, chief executive of the Early Years Alliance, said: “The early years is in crisis. What our sector needs is a comprehensive long-term strategy underpinned by substantial investment. What we are getting is the equivalent of rearranging the deckchairs on the Titanic.

“Nurseries, pre-schools and childminding settings are dealing with the consequences of years of government underfunding, alongside soaring energy prices, sky-high inflation rates and record increases in the national living and minimum wage. And yet, average funding increases of no more than 4% will amount to pennies in practice  and a few extra pennies on an already-wholly insufficient funding rate isn’t going to stop prices going up for parents, or more and more settings being forced to close their doors for good.”

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