Child Care: High Quality, Affordable?


  • Nationally, the average flat rate of early years funding per child has been frozen since 2013-14, meaning many providers have faced cuts in real terms. In 2015-16, the Department for Education allocated £2.7 billion for early years childcare, of which some £2.2 billion was for spending on three and four-year-olds. The total amount of funding for three and four-year-olds has increased since 2013, but funding per child has remained the same in cash terms, meaning a 4.5% cut in real terms. The current national average rates are £5.09 per hour for two year-olds and £4.51 for three and four-year-olds, excluding Early Years Pupil Premium.1  This was despite Government pledges to make the early years central to the fight against inequality and the enhancement of social mobility.
  • The Department has recently undertaken a costing review and found most providers relying to some extent on cross‑subsidisation between ages (as childcare is more costly for younger children). Providers reported that they also relied on payments from parents for additional hours purchased. Additionally, they told the National Audit Office that they rely on the goodwill of volunteers and on lower-paid workers who have a sense of vocation about providing childcare.2
  • Providers are concerned about whether the change will be affordable with the new national average rates of £4.88 for three and four-year‑olds and £5.39 for two-year‑olds. While some providers may expand, creating greater economies of scale, others may face reduced opportunities to cross-subsidise as parents will be paying for fewer hours.3
  • The new 30 hours entitlement for three and four-year-olds could put further implementation of the entitlement for disadvantaged two-year-olds at risk. In 30 local authorities, fewer than 50% of eligible two-year-olds were accessing the free entitlement in January 2015, while the Department was still some way off its aspiration for 73%-77% take‑up nationally. Many providers have finite capacity and, in future, may choose to offer more hours to their existing three and four-year-old children rather than take disadvantaged two-year-olds, who require more staff per child.4
  • A report from the Institute for Public Policy Research (IPPR) found that the Government’s policy costing, at £365 million, was ‘inexplicably low’ compared to the IPPR’s own estimation, using 2015-16 prices, or £1.6 billion annually.5 This raises concern that providers will not be offered a sufficient hourly rate to enable them to provide good quality childcare delivered by a well-qualified workforce.
  • A survey of almost 1,500 childcare providers found that 49% of providers think there’s a risk that they could close as a result of the 30-hour free childcare extension (with a further 1% already planning on closing), 48% think that the 30-hour offer will cause them to reduce the number of places they offer to other age groups and 50% don’t feel confident that they have the capacity to meet the demand for places under the 30-hour offer.6
  • There are also concerns that this policy will not support the most vulnerable and disadvantaged children as the 30 hours is only offered to children whose families have at least one parent in work.7 This means that children in workless households will not be eligible. It is concerning that a policy designed to support children is being determined by family background rather than needs of the child.
  • Evidence shows that only high quality settings allow the most disadvantaged children to benefit from early education.8 Attending childcare in itself is not sufficient to reduce the gap between disadvantaged children and their more affluent peers by the time they start school.
  • The DfE’s own pilot study, conducted in 2009, concluded that the success of the free hours offer would depend on providing sufficient places in high quality provision.9 The follow up 2013 research report found that very few children in the study who were receiving the free hours offer were attending provision deemed to be high quality.10
  • Gaps in provision for disabled children have also increased, with only 21% of English local authorities and 7% in Wales now having enough childcare for this group, compared with 28% (England) and 18% (Wales) in 2014.11  Childcare remains inaccessible for too many families.
  • The costs of childcare in many European countries are broadly comparable with those in England, the difference is the level of state support for childcare, which is much higher in other countries, thus reducing the price that parents are asked to pay. 
  • The 2015 Childcare Costs Survey found that the cost of sending a child under two to nursery part-time (25 hours) was £115.45 per week in Britain, or £6,003 per year, which is a 5.1% rise since 2014. The cost of part-time care from a childminder has also risen – by 4.3%– and now costs £104.06 per week or £5,411 per year.12
  • Over the last Parliament (2010- 2015) the cost of a part-time nursery place for a child under two increased by 32.8%. Households paying for this type of care spent £1,533 more in 2015 than they did in 2010, while wages have remained largely static.13
  • Following cuts to early years and Sure Start provision, the Government plans more cuts – it is neither protecting funding for early years provision nor taking full account of the additional funding needed to expand provision.  The Government’s proposed national funding formula for early years is simplistic and not based on the objective assessment of resources that we need.  The Government is limiting the local authority role in supporting quality and coordinating provision.  The NUT believes that early years education should be about investing in quality provision, for example by securing low staff to child ratios and making sure staff are highly-qualified and well-rewarded.  The Government’s approach, seeking to cut staffing and understating the importance of qualifications, puts it on the wrong side of the quality argument. 


1 National Audit Office, Entitlement to free early education and childcare, (March 2016) via p.7

2 National Audit Office, Entitlement to free early education and childcare p.8

3 National Audit Office, Entitlement to free early education and childcare p.9

4 National Audit Office, Entitlement to free early education and childcare p.9

5 Giselle Cory, Institute for Public Policy Research Extending the Early Years Entitlement: Costings, Concerns and Alternatives (October 2015) p. 3

6 Pre School Learning Alliance Childcare Providers Fear Closure

7 Department for Education 30 Hours Free Childcare Eligibility


9 Gibbet al. Rolling out free early education for disadvantaged two year olds: an implementation study for local authorities and providers Department for Education (March 2010) via p. 9

10 Maisey et al. The Early Education Pilot for Two Year Old Children: Age Five Follow-up Department for Education (March 2013) via p. 21

11 Adam Butler & Jill Rutter, Access Denied: A report on childcare sufficiency and market management in England and Wales (2015) p. 2 Available via