Government response on childcare funding concerns described as “woeful”

Child moulds from plasticine on table. Hands with plasticine.


Childcare providers have criticised what they call the Government’s “woeful” response to a Select Committee report on childcare, saying it fails to address the funding problems facing the sector.

The Pre-School Learning Alliance, which represents childcare providers, said the Government’s response to the Treasury Select Committee report on childcare, published in March, fails to address concerns about a projected half billion pound shortage in sector funding. Its research suggests providers will close or have to raise fees substantially for parents due to funding problems.

The National Day Nurseries Association published a survey of its members in England which shows shortfalls in government funding for the 30 hours have more than doubled over the past year and that the deficit between the cost of delivery and funding paid via local authorities has grown to an average of £2,166 per year per child. The NDNA says this cost is passed on to parents through higher fees for younger children or charges to parents for extras.

Almost half of the respondents to its survey  charge parents up to £10 per day to make up the shortfall to provide these ‘free’ childcare places and a third say they are having to limit the funded places they can offer to try to reduce their spiralling shortfalls. One in five English nurseries expect to make a loss and the NDNA says that, since the 30 hours policy began, closures have increased by 47% on last year. 71% of nurseries plan to increase their fees – by average of 4.6% higher than last year’s 4.5% and 19% of nurseries expect to make a loss, with only 43% expecting a profit or surplus.

Neil Leitch, chief executive of the Pre-school Learning Alliance, said:“It beggars belief that in the face of such overwhelming evidence that the childcare sector in England is inadequately funded, the government continues to dig its heels in and insist that everything is fine.
“All the government has done here is regurgitate old excuses in an attempt to defend the indefensible. The Treasury Committee’s report explicitly criticised the practice of comparing local council funding rates to frontline provider delivery costs, describing it as ‘misleading’, and yet ministers have done exactly the same thing once again in this response.”

In response to the Committee’s call on the Government to ensure the hourly rate paid to providers to cover its 30-hour free offer reflects their current costs and is increased annually in line with costs, the Government says that it “is confident the Early Years National Funding Formula is allocating that funding fairly and transparently”.

It says its investment is based on the DfE’s ‘Review of Childcare Costs’ which was described as “thorough and wide ranging” by the National Audit Office. It claims the government’s average hourly funding rate to authorities for three- and four-year-olds “also compares very favourably with published independent research into the hourly cost of childcare”.

Leitch says: “The government continues to peddle the line that current funding levels are based on a childcare cost review that ‘the National Audit Office described as “thorough and wide-ranging”‘, completely failing to acknowledge that this description was based at least in part on the understanding that the review included delivery cost data from thousands of childcare providers, which it didn’t.

“Early years providers do an incredibly important job for little recognition and even worse pay. When serious concerns are being raised across the board about the way that the sector is being funded, they deserve more than the woeful response that the government has seen fit to issue to this report.”

The Government response also says “it is not possible to provide the Committee with an estimate of the economic impact of government spending on childcare support without further evidence”, that it is too early to evaluate the impact of its 30-hour offer and tax-free childcare and bats away concerns about Universal Credit and upfront fees and awareness of tax-free childcare, saying these are in hand.

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