The introduction of 30 hours’ free childcare means parents may face higher costs and nurseries could close, an education charity has warned.

From 1st September, more than 200,000 parents in England are entitled to 30 hours’ free care for children aged three to four.

The government says a record £6bn a year is being invested into the childcare scheme.

However, a survey by the Pre-school Learning Alliance (PLA) suggests 74% of the nurseries that have responded to the new scheme, feel that the government has underfunded it.

Some nursery providers warned that the amount they are being paid by the government to deliver the care will not cover their costs.

The PLA survey received answers from 1,400 nursery providers in England. It found:

  • 74% of respondents said their current funding from the government would not cover the cost of delivering the 30-hour free childcare places
  • 38% do not believe their business would be sustainable in 12 months’ time
  • 52% said they will increase charges for products such as children’s meals, nappies and trips
  • 42% were not confident they would be offering enough free childcare places to meet the expected demand

“The launch of the 30-hours offer should have been a day of celebration. Instead, all we have is a policy in chaos,” said Neil Leitch, chief executive of the PLA.

“The government’s total refusal to tackle, or even acknowledge, the fundamental problem of early years underfunding has left providers across the country struggling to find ways of delivering the offer that won’t force them out of business”.

Karen Simpkin, who runs a nursery in Sheffield, said she will offer only a limited number of free places.

“It costs me £7.50 an hour to look after a child in my nursery, but I’m only going to get £4.07 an hour from the government. I already know that I’m going to make a loss”.

Overall the Department for Education has allocated £2.7bn toward funding the scheme in 2017/18, with local authorities receiving, on average, £4.78 per hour to provide the free childcare places.

Minister for Children and Families Robert Goodwill said: “We are determined to support as many families as possible with access to high-quality, affordable childcare, which is why we are investing a record £6bn every year by 2020 in childcare – more than ever before – and doubling the free childcare available to working parents to 30 hours a week, saving them up to £5,000 a year per child.

“This funding includes an additional £1bn per year by 2019-20 to pay for the free offers and to raise the national hourly rate to local authorities for three and four year olds to £4.94 per hour. This is far higher than the average hourly cost of providing childcare for three- and four-year-olds, which recent research has found to be £3.72.

“The 30-hour offer is already being delivered in several areas across the country, with over 15,000 children benefitting from a place.

“We know from our evaluation that providers are committed to offering 30 hours and the additional hours are having a really positive impact on families, taking huge pressures off families’ finances.”