Childcare services in the UK have issued an alert that, if there is no governmental intervention regarding the central financing model, parents could face a fee hike between 30% and 40%. This steep potential increase is due to the “chronic underfunding and continually escalating costs” in the sector, according to a combined proclamation from the childcare providers.
Associations representing approximately 80% of childcare services in the UK, including the Childhood Professionals Association, Childhood Services UK, Ibec, the Federation of Early Childhood Providers, and Seas Suas, issued this statement.
“We have crossed the crisis threshold,” announced Chairwoman Elaine Dunne of the Federation of Early Childhood Providers.
One association’s recent survey outcomes show that between 40% and 50% of its members are likely to abandon central financing in September, with another indicating 75% are reconsidering their involvement in the scheme.
Childcare service fees were frozen in September 2021 in order to qualify for central funding, a state-administered grant for the childcare sector that aims to increase affordability and ensure the sustainability of the industry.
The providers are advocating for changes in the financing model and are petitioning the Coalition Government for inclusion in the scheme’s redesign.
According to the statement, all providers should have the freedom to heighten their fees by £33.30, and further assistance should be negotiated for those affected by long-standing fee freezes. Additionally, the capitation rate of the Early Childhood Care and Education (ECCE) should be boosted to £120 for the 2024-2025 academic year, which now stands at £69 for each child.
An allowance of £4.60 per child, per hour, for three hours daily over a five-day week is the current setup of the grant. The Children Services UK spokesperson stated, “It’s simply untenable to run an ECCE room with a contribution of £4.60.”
According to Ms. Dunne, the way central funding has been divided “has resulted in us operating at a loss.” A number of childcare businesses are still enforcing rates from 2017 due to the lack of annual childcare fee increases in the years leading up to the pandemic.
“The real priority here is meaningful conversations,” she added, “The children’s needs are being overlooked.”
The Children’s Department stated that childcare services that charge “below a certain level will have the opportunity to apply for an increase of their fees up to an approved limit.”
The department spokesperson has confirmed that the investment has surged by 28 per cent to €33 million in core funding for the period from September 2024 to August 2025. They also highlighted that over €1.1 billion of taxpayer’s money has been funnelled into childcare services.
The department will continue the fee cap under core funding for the majority of service providers, reciprocating their substantial and heightened contribution. In addition, following reviews from the sector, the department has initiated a new system for evaluating and approving fee increases.
However, Childhood Services Ireland has commented on how the level of childcare investment in Ireland falls short of the Unicef’s advised 1 per cent of the gross domestic product.