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£400m for UK early years sector will ‘buy time’ but isn’t enough, experts say

A funding injection of £400m into the early years sector will “buy time” ahead of a massive expansion of state-funded childcare in the UK, but will not be enough to keep nursery doors from closing, a body representing providers has warned.

Ministers have announced that applications for the first wave of new government-funded childcare offers will open to working parents of two-year-olds on 2 January, and have increased the amount of money it gives to local authorities to pay for the care.

The Department for Education said local authorities would be given £67m in new funding for the increase in the minimum wage and £57m to cover pay and pension costs for educators in school settings, in addition to the £288m funding announced at the spring budget.

From April next year eligible working parents of two-year-olds will get 15 hours a week of taxpayer-funded childcare in term time; from September the 15 hours will be extended to children from 9 months old with three- and four-year-olds still getting the current 30 hours. From September 2025, all eligible parents of children under the age of five will be able to get funding for 30 hours a week of childcare in term time.

On Wednesday, the government announced it will increase the hourly rate it gives to local authorities to fund the hours to £11.22 for under twos, £8.28 for two-year-olds (up from £7.95), and £5.88 for three- and four-year-olds (up from £5.62).

Sarah Ronan, director of the Early Education and Childcare Coalition, welcomed the increase but said the rate for three- and four-year-olds fell a “long way short of what was needed”.

“It’s good to see that the increases have recognised the pressures that providers are facing as a result of inflation, it will buy time,” she said. “But they don’t account for the ongoing shortfall in funding that has existed for the three- and four-year-olds for far too long. The rate has increased slightly but is still a long way short of where it needs to be to match the true cost of provision.”

Neil Leitch, chief executive of the Early Years Alliance, said nurseries and childminders were still in the dark as to what they would actually receive, as today’s announcement covered the funding provided to local authorities who then decide the local rate.

“This makes it impossible for them to prepare for – never mind deliver – the expanded offer, at a time when many will be receiving a deluge of inquiries from parents eager to secure their funded places,” he said.

“The policy is a perfect example of the ‘announce first, think later’ approach that government continues to take when it comes to early years. With the start of the expansion, it remains to be seen whether there is any hope of this policy actually working in practice.”

The education secretary, Gillian Keegan, said the childcare offer would “make sure parents no longer have to choose between a career and a family”.

She said: “I know the delivery of this transformation is no easy task, which is why I am pushing ahead with increased funding rates across the country and up to £1,200 for new childminders, knocking down barriers to recruiting and retaining the talented staff that provide such wonderful care for our children.”