Nursery funding issue causing 'real concern' says operator

Changes to funded childcare were first announced in the 2023 budget

Parents could be left with less choice and longer waiting lists for nursery places because of a lack of funding, according to one operator.

From April, working parents of two-year-olds will get 15 hours of funded childcare a week during term time.

But a director at Ashbourne Day Nurseries, based in Milton Keynes, said the funding was not enough to cover costs.

The government said it was increasing hourly funding rates.

From April, most working parents of two-year-olds will get 15 hours per week funded childcare during term time, with children from nine months included from September.

By September 2025, this will be expanded to 30 hours as part of government efforts to help parents return to work.

Parents need to earn between between £8,670 and £100,000 to be eligible.

Imran Mehdi is a director at Ashbourne Day Nurseries, which has been operating for 16 years

Ashbourne Day Nurseries operates 32 sites from the West Midlands to Essex.

Company director Imran Mehdi said in some local authority areas they were receiving about £5 an hour per child for funded places, when actual costs of delivering the childcare was £7 an hour.

He said funding was rising by about 4.6%, while the minimum wage was rising by about 10%.

He added this was leading to "real concern" in the sector - and smaller companies without multiple sites were "struggling and closing".

"There will not be enough operators or childcare spaces to cater for the needs of parents," he said.

Rosie is self-employed and has a two-year-old son in childcare

Rosie has a two-year-old son who attends an Ashbourne nursery in Houghton Regis, Bedfordshire. From April, she will be eligible for 15 hours of funded childcare.

"It is going to be amazing," she said. The self-employed mother, who is expecting another child, said her mortgage costs had increased and so help with childcare fees would "make a massive difference".

Recruitment 'crisis'

Another Milton Keynes-based provider with 16 nurseries, Acorn Early Years, has also raised concerns about funding.

Laura Tingey, head of early years and compliance, said the sector faced "huge challenges".

She said funding rates were "not enough" and recruitment challenges were "causing a crisis".

A Department for Education spokesperson said: "To make sure there are enough places across the country, we are investing hundreds of millions of pounds to increase hourly funding rates, and have allocated £100m in capital funding for more early years and wraparound places and spaces.

"To increase staff numbers, we are also launching a new national recruitment campaign and are looking to introduce a new accelerated apprenticeship route into the sector."