Childcare providers ‘too full’ to roll out Sunak’s free childcare scheme

Childcare providers have no space to roll out the government’s expanded free childcare policy, with around seven in 10 services already full, a damning new study has found.

A report by the Early Years Alliance discovered that 55 per cent of all childcare services have no places available and also have a waiting list.

The researchers, who polled almost 1,200 early years providers, found that staff shortages and a lack of available spaces, combined with funding struggles, mean that most services planning to introduce the government’s childcare policy, which is due to take effect in April, won’t be able to increase places to meet demand.

The alliance, which represents nurseries, preschools and registered childminders, also discovered that a sizeable chunk of providers are contemplating not providing the flagship free childcare policy at all.

Chancellor Jeremy Hunt revealed a major extension to free childcare for parents in the spring of last year in an effort to win back voters, with working parents who have children under five told they could claim 30 hours of free childcare for 38 weeks per year from September 2025.

But one childcare provider has warned that the new policy will place yet more pressure on “an already stretched and underfunded sector”, saying that “adding more children to the mix will only be adding fuel to a burning building, and eventually it will come falling down”.

Neil Leitch, chief executive of the Early Years Alliance, said the research “should send alarm bells ringing” among ministers.

“Years of sustained underfunding combined with a worsening staffing crisis and limitations on space means that many providers simply won’t be able to increase places to meet the surge in demand for the new offers,” he said.

He called for the government to pay attention to the “scale of the crisis” the childcare sector is battling and to launch “definitive action” as the 2024 Budget gets closer – adding that “continuing to deny there is a problem is simply not an option”.

It comes after The Independent recently revealed that thousands of nurseries had shut their doors amid staffing shortages, sparking fears that the government’s promise to expand free childcare was “doomed to failure”.

The new research found that almost nine out of 10 of the services planning to offer places for two-year-olds via the government’s new scheme envisage the policy prompting a surge in demand – yet as many as seven in 10 have no plans to extend the number of places they offer.

The researchers found that around four in 10 services had been given their funding rate for two-year-olds – with around a third of these providers warning that their new rate would be lower than the cost of providing childcare.

Around a quarter of all providers polled said it is likely, or even very likely, that they will be forced to shut in the next year.

It coincides with the results of another survey, which found that a third of parents eligible for the new childcare scheme for two-year-olds are contemplating quitting their jobs or curbing their working hours because of a recent rise in childcare costs.

The study, carried out by the prominent campaign group Pregnant Then Screwed, discovered that around half of eligible parents had sent a code to their childcare service but had no idea if they would be offered a funded space. This is despite the first stage of the government’s new childcare policy set to kick off only six weeks from now.

Joeli Brearley, the organisation’s founder and chief executive, said: “Many providers are increasing costs for sundry items and for childcare outside of funded hours as a desperate attempt to cover their losses from delivering these schemes; this is drastically reducing anticipated savings.

“The new benefit sounded too good to be true, and for many families, it will make little difference to their outgoings. Once again, parents are picking up the tab due to underfunding from the government.”

Researchers polled as many as 11,100 parents with a child under the age of five – including 6,256 parents eligible for the new government childcare scheme for two-year-olds. Seven in 10 of those polled said their childcare costs had recently surged or were about to go up.

Danielle Barnett, a mother from Cheshire, said: “My little one is two, and we received a letter last week to say that fees will be going up from £65 a day to £86 a day. We are now paying £1,490 a month for four days a week. I’m going to have to leave my job as I simply can’t afford this.

“The 15-hour funding doesn’t kick in until April, which will help slightly, but what do I do right now as I simply can’t afford it. We’re not going to benefit in the slightest from the new government scheme... in fact, we’re now worse off.”

A Department for Education spokesperson said the government is introducing the “largest ever expansion in childcare support in England’s history”, adding that the provision is “set to save families using the full 30 funded hours an average of £6,900 per year”.

The representative added: “Our average funding rates for new entitlements are expected to be substantially higher than the hourly fees paid by parents last year, and we are already seeing providers looking to expand their placements across the country.

“We are continuing to support providers to deliver each stage of the rollout through increases to the rates we pay, our national recruitment campaign, and establishing more qualification routes into the sector.”