The Women’s Budget Group has estimated the shortfall in the Government’s budget to cover the ‘real’ cost of delivering the expanded entitlement for children from nine months old from working households.
How the figure was calculated
To achieve this, it compared the chancellor’s announced investment of £4.2bn in 2025/26, announced in March last year, to data provided by the Department for Education on estimated delivery costs.
The estimated costs were in response to a Freedom of Information request submitted by the Early Years Alliance, which estimated that £7.48 per hour, on average, would cover the full cost of funded places by 2020/21 for three and four-year-olds.
When taking into account inflation and increases to the National Living Wage, the Group says the estimated cost of delivery rises to £9.42 per hour, per child by 2025/6.
Assuming that the cost of provision for two-year-olds is 40 per cent higher than three and four-year-olds, the ‘true’ cost for that age group would be £13.19. For children under the age of two, assuming 90 per cent higher costs than for three and four-year-olds, the ‘true’ cost would be £17.48. All figures are general estimates.
'It is incredulous, and indeed dangerous, for the Government to underfund the sector to the tune of £5bn'.
Ignacia Pinto, senior research and policy officer at the Women’s Budget Group said, ‘In two weeks’ time, the chancellor has the opportunity to make good on promises made to parents a year ago and meet the additional £5bn a year cost of delivering hours desperately needed by parents up and down the country.
‘Otherwise, come April with the roll out of 30 hours a week to three and four-year-olds, there will be yet more stories of workers leaving the sector, parents unable to secure a place, and nurseries shutting their doors because they can’t make the maths work.’
Sarah Ronan, director of the Early Education and Childcare Coalition (EECC), added, ‘It is incredulous, and indeed dangerous, for the Government to underfund the sector to the tune of £5bn when history tells us that this is likely to shrink provision rather than grow it at a time of unprecedented demand.
‘The Government must use the upcoming Spring Budget to stabilise the sector with funding levels that match the true cost of delivery. In particular, the rate for three- and four-year-olds is critically low.
‘Continuing to knowingly underfund these entitlements is a political choice to abandon the sector.’
