Early Years Providers Face Financial Pressures, Threatening Government-Funded Childcare Places

Early Years Providers Face Financial Pressures, Threatening Government-Funded Childcare Places

The Early Years Alliance (EYA) has warned that financial pressures are forcing childcare providers across England to limit the number of government-funded places offered to parents and increase prices. This comes as the government expands its funded childcare program for working parents.

The EYA surveyed 1,155 senior staff in nurseries, preschools, and childminders in England. The survey revealed a stark picture of the sector's struggles, with 59% of providers likely to reduce or opt out of offering funded places for three and four-year-olds. Additionally, 94% of respondents said their settings would likely increase fees for non-government funded hours, and 77% would introduce or increase charges for optional extras like nappies, meals, and trips.

The EYA attributes these challenges to a "perfect storm" of factors, including national insurance and minimum wage rises. The survey found that only 36% of providers currently offering funded two-year-old places plan to extend all these places from 15 hours to 30 hours a week from September. Similarly, only 41% of settings offering funded under-twos places plan to increase all 15-hour places to 30-hour places.

The EYA calls on the government to increase investment in early years education to ensure providers can meet rising costs while keeping parent fees low. They suggest exempting early years providers from national insurance changes or compensating them fully for the increases.

"These survey findings should set alarm bells ringing across Government. At a time when ministers are looking to significantly expand the early entitlement scheme, we have a huge proportion of providers warning that the exact opposite is likely, with many forced to limit funded places or opt out of the offers entirely due to unsustainable financial pressures."

The EYA urges the government to work with the sector and ensure that the early years receive the investment needed to deliver on the promise made to parents. They warn that without action, the sector may reach a point of no return.