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Cost of delivering childcare places increases 20%

By Rachel Lawlercost of providing funded childcare places

The cost of delivering a funded childcare place has increased 20% since 2018, according to statistics released by the Department for Education (DfE).

The figures come shortly after the DfE revealed that it would increasing the early years funding rates paid to local authorities by just 2% in 2020/21 – and it is not yet clear how this will be passed on to providers.

The Survey of Childcare and Early Years Providers 2019 shows that the average annual cost of delivering childcare for private and voluntary group providers was £240,333. This is a 20% increase on the previous year’s average cost of £199,708.

Neil Leitch, chief executive of the early years alliance, said: “These figures show just how woefully inadequate the recently-announced increase in early years funding truly is. With ongoing increases in the national living and minimum wages, the cost of running a childcare business has increased hugely over recent years, and yet government investment into the sector has completely failed to keep up.

“With plans to both increase statutory wage requirements and expand so-called ‘free childcare’ offers being mooted by various political parties, it’s clear that, whoever is successful at next month’s general election, a significant increase in childcare funding will be needed if the early years is to remain viable and sustainable.

“We urge every political party to include a commitment to ensure adequate investment into the sector in their election manifesto. With the sector already facing a funding shortfall of £662m, and hundreds of providers closing every month, we cannot allow the current situation to continue.”

Find out more
Government reveals local authority funding rates for 2020/21

Read the governent's statistics in full