Surveys highlight impact of inadequate childcare funding

New childcare surveys show the impact of inadequate government funding on the childcare sector and knock-on effect on fees and parents’ careers.

Child with painted hands


More than a third [35%] of early years providers in England who are planning to increase childcare fees this year say they would not do so if government funding was enough to adequately cover their costs, according to a new survey.

Four in 10 [43%] said that they would be raising childcare fees by a smaller amount if funding was adequate, according to the survey of nearly 2,000 nurseries, pre-schools and childminders by the Early Years Alliance.

It found that 86% of providers delivering funded three and four-year-old places say that the funding they receive is less than the cost of delivering places, and of those whose rate has been confirmed as increasing in April 2022, 90% say that this will not be enough to cover the cost of delivery.

The survey also revealed that 30% of settings are currently operating at a loss and 34% of settings expect to be operating at a loss in 12 months’ time.

Funding issues have also had an impact on staff:

  • 73% of respondents haven’t had a pay rise in the past two years
  • 15% (roughly 1 in 6) of respondents are currently, or have previously been, in receipt of Universal Credit
  • 5% (1 in 20) of respondents have had to use a food bank over the past two years
  • 31% of respondents are currently overdrawn in the personal bank account or accounts
  • Almost half (48%) respondents are actively considering leaving the early years sector (42%), have already confirmed they are leaving (5%) or have already left (1%).

Ninety-eight per cent of respondents said the government isn’t doing enough to support the early years sector.

In a parallel parent survey carried out by Pregnant Then Screwed and Mumset of around 27,000 parents,  62% of parents say that the cost of childcare is now the same or more than their rent/mortgage while 25% say that they have had to cut down on necessary expenses such as food, heating or clothing to afford childcare. Some 43% of mums said that the cost of childcare has made them consider leaving their job while 40% said they have had to work fewer hours than they would like because of childcare costs.

Neil Leitch, chief executive of the Early Years Alliance, said: “Providers are now facing a cliff edge, with more than a third of early years businesses currently operating at a loss (30%) and even more (34%) expecting to operate at a loss in a years’ time – but this could all be avoided if the government finally admitted there is a problem and took action to plug the widening funding gap.’

“Early years providers offer a lifeline for working parents and vital early education for young children, but it is becoming near-impossible for them to offer these critical services at affordable prices. The government needs to address the sector’s funding gap before more parents – and especially mothers – are forced to pay ever-increasing prices and compromise their careers to ensure their child can receive good quality care and education.”


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