A funding injection of £400m into the early years sector will “buy time” ahead of a massive expansion of state-funded childcare in the UK, but will not be enough to keep nursery doors from closing, a body representing providers has warned.
Ministers have announced that applications for the first wave of new government-funded childcare offers will open to working parents of two-year-olds on 2 January, and have increased the amount of money it gives to local authorities to pay for the care.
The Department for Education said local authorities would be given £67m in new funding for the increase in the minimum wage and £57m to cover pay and pension costs for educators in school settings, in addition to the £288m funding announced at the spring budget.
From April next year eligible working parents of two-year-olds will get 15 hours a week of taxpayer-funded childcare in term time; from September the 15 hours will be extended to children from 9 months old with three- and four-year-olds still getting the current 30 hours. From September 2025, all eligible parents of children under the age of five will be able to get funding for 30 hours a week of childcare in term time.
On Wednesday, the government announced it will increase the hourly rate it gives to local authorities to fund the hours to £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).
Sarah Ronan, director of the Early Education and Childcare Coalition, welcomed the increase but said the rate for three- and four-year-olds fell a “long way short of what was needed”.
“It’s good to see that the increases have recognised the pressures that providers are facing as a result of inflation, it will buy time,” she said. “But they don’t account for the ongoing shortfall in funding that has existed for the three- and four-year-olds for far too long. The rate has increased slightly but is still a long way short of where it needs to be to match the true cost of provision.”
