Parents ‘could lose free access to daycare’ if daycare funding is not expanded

Daycare centers have warned that they will not be able to offer free childcare places to parents next year without more government funding despite the Prime Minister’s aim to increase the number of “school-ready” children.

Early childhood providers said The paper who face a funding shortfall to cover the tax and wage increases outlined in the October Budget.

As such, expansion plans to address a shortage of nursery places are on hold, threatening Sir Keir Starmer’s promise to increase the number of four and five-year-olds considered to be both from an educational and social point of view to start school. 60 percent currently to 75 percent.

Nurseries in disadvantaged areas said they will be forced to close or cancel expansion plans if funds are not raised, while others are increase rates for hours not paid by the Government by up to 20 percent.

Ministers meet with the sector this week, The paper understands, as the Prime Minister prepares to set out the commitment as part of a handful of “ambitious but achievable milestones” for his Government on Thursday.

The target builds on the Government’s plans to expand the provision of free childcare to 30 hours a week for all children aged nine months to four years, starting in September 2025. Currently, parents of children aged nine months to two years old can claim 15 hours a week of Government-funded childcare, and parents of children aged three to four years old are entitled to 30 hours free.

Nurseries said government funding is not up to the costs of delivering these places and are urging ministers to intervene.

The Government has said funding increases for providers will reflect increases in the minimum wage, earnings and the consumer price inflation index, but Early Years Alliance said no promise has been made so far to take into account the increase in employers’ NICs. announced by Chancellor Rachel Reeves.

National insurance payments for employers will increase from 13.8 per cent to 15 per cent in April. The secondary income threshold (the level at which employers start generating NICs) will be reduced from £9,100 to £5,000.

Neil Leitch, chief executive of the trade body Early Years Alliance, said the vast majority of providers are raising prices for hours left out of the Government scheme, which will affect parents who need more than 30 hours of care a week. children, as well as those who are not eligible for free hours.

But it warned this may not be enough to offset the costs of increased national insurance and is expected to force some nurseries to close, especially those in deprived areas, which are more reliant on government funding.

He said: “The Government is about to implement its biggest expansion program in history, and we have a massive hit from National Insurance increases. Unless that is resolved, it is difficult to see how you know they will be able to deliver.”

The Early Years Alliance said NICs will increase the cost of running its own 40 settings by £461,000.

Despite the government’s expansion, Ofsted data published last month showed the number of early years providers in England fell by more than 1,000 over the past year.

Mr Leitch added: “What will happen is that the most disadvantaged and vulnerable children – the very children the initiative seeks to support and align with their wealthier counterparts – are the same children who are least likely to be served. because operators will not enter those areas, or they will close in those areas.”

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Nicci Knight, operations director at Zizus Day Care in Middlesbrough, is among nurseries who fear they will be forced to close as changes to IAS and salaries will cost an extra £38,000 next year.

He said Zizus and many other providers in Middlesbrough – one of the most deprived areas of the country – predominantly cater for parents who claim government-funded hours rather than paying privately.

This leaves you very little room to pay higher NICs by increasing unfunded hourly rates. It plans to increase charges by 15 percent next year, but this will not be enough to cover its increased costs.

He warned that the Government’s school readiness target could be threatened by the closure of nurseries.

She said: “Will nurseries still open in April? “At the moment, many of us are very worried that we are literally not going to be able to afford national insurance and the increase in the minimum wage.”

The nursery, which cares for 72 children, will see an extra £38,000 added to its costs due to budget increases in April – money it does not have, Ms Knight said.