The Childcare Funding Crisis Has Got Worse Since The Election, Warns Sector
By September 2025, eligible parents will be able to receive 30 hours of free childcare a week.
3 min read
A leader in the childcare sector has raised alarm about the financial pressures facing providers, telling PoliticsHome that the situation is worse now than it was before last year's general election.
Speaking to PoliticsHome in the run-up to Wednesday's Spring Statement, Chief Executive Officer of the Early Years Alliance Neil Leitch said the issues were "predominantly" the fault of the Treasury.
Labour’s plan for childcare and early education was a key feature in its manifesto pledges and later formed part of the government’s missions and milestones for its Plan for Change.
The party promised to take up the Conservatives' previous plans for childcare expansion, despite the now-Education Secretary Bridget Phillipson warning at the time that there was a risk of "crashing the childcare system" due to providers struggling.
Under the plans, by September 2025, eligible parents will be able to receive 30 hours of free childcare a week.
Leitch, whose charity runs 39 nurseries in some of the most disadvantaged areas nationwide, said that despite Labour’s rhetoric during the general election campaign giving the sector hope, the situation facing childcare providers has worsened since then.
While Leitch said that the Labour government's intentions are right, delivery so far has been “non-existent”.
“It feels actually worse," he told PoliticsHome.
“We as an organization delivering care and education for the most vulnerable children — predominantly down to the Treasury changing its priorities from pre-election to now — are in a worse place than we were pre-election under the Tories."
Leitch was keen not to lay the blame at the door of the Department for Education or Phillipson, who he said was the first education secretary to tell him that the early years sector was the "number one priority".
He blamed “an element of incompetence from Treasury”, accusing the department of not properly assessing the impact of the policy announced in the October budget.
He spoke to PoliticsHome on the day the government confirmed that private and voluntary early years settings — which comprise the majority of the sector — would not be reimbursed for the increase in employers’ National Insurance contributions announced late last year.
These contributions will rise from 1.2 to 15 per cent from April 2025, under plans announced by Chancellor Rachel Reeves.
Figures in the sector have warned that the increase will add to costs facing childcare providers and force them to charge parents higher fees and offer fewer places.
A recent survey by the Early Years Alliance found that nearly six in 10 early years settings are likely to cut the number of three and four-year-old funded places they offer or opt out of offering funded places for this age group entirely.
A quarter of providers are likely to do the same for funded two-year-old places over the next 12 months, the survey also found.
Leitch told PoliticsHome that the cost of sending a child to an early years setting will rise significantly because of a shortfall in funding.
However, he said ministers were in a "difficult position" when it comes to the policy because expanded free childcare was a "vote winner" at the July general election.
“It was important that they got into office to try and change things from their perspective.”
A government spokesperson told PoliticsHome: “Giving every child the best start in life is central to our mission to break the unfair link between background and success, and through our Plan for Change, we’ll get thousands more children school-ready by age 5.
“That’s why despite having to take tough decisions to fix the foundations of the economy, we are raising spending on the early years entitlements to over £8bn next year and we have announced the largest ever uplift to the early years pupil premium, increasing the rate by over 45 per cent compared to 2024-25.
“On top of this, we have recently announced details of a targeted £75mn grant to support the increase to 30 government-funded hours from September, alongside our strengthened guidance to make sure that parents do not face unfair charges to access a place.”
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