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Real-terms funding cuts lead to higher childcare costs for parents

By Rachel Lawler
child playing real terms funding cut
Parents are seeing an increase in the cost of childcare, due to decreasing funding levels in the past five years, according to the latest research from Ceeda.
Ceeda’s latest report has found that 44% of nurseries, pre-schools and childminders in England are receiving less funding, in real-terms, than they were five years ago.
Real-terms funding cut
According to Ceeda’s analysis, 60 local authorities in England are now paying childcare providers less per hour for funded three- and four-year-old places in 2017/18 than they were in 2013/14 after adjusting for inflation.
The average real-terms increase in funding since 2013/14 across all local authorities was just 1.8%, creating a £616 million deficit in 2018.
The Isles of Scilly saw the highest real-terms decrease, with providers getting 17% less than they were five years ago. North Lincolnshire (15%) and Sunderland (14%) saw the next two most significant decreases.
Low-income families
Dr Jo Verrill, managing director at Ceeda, commented: “Without prompt action, continued government under-investment is likely to hit disadvantaged children the hardest: low-income families are least able to pay for ‘extras’ when accessing funded hours, and providers in deprived areas struggle to generate private fee income to help them stay afloat.
“We are already seeing the impact, with places declining in the most disadvantaged communities and increasing in more affluent neighbourhoods.”
Need for change
Neil Leitch, chief executive of the Alliance, added: "Without change, we're going to see parents facing ever-rising childcare costs as nurseries, pre-schools and childminders are forced to increase fees and additional charges in order to plug this growing funding gap – and, in the worse cases, providers who simply cannot make the books balance will be forced to close their doors for good. This isn't an exaggeration; it's already happening.
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