Subscribe to our Newsletter to keep up to date with everything happening at Riverside Training (Spalding) Ltd


At last, there is now real pressure on the Government to address the devastating shortfall in funding for Early Years education which is jeopardising the long-term sustainability of the sector.

The All-Party Parliamentary Group (APPG) for Childcare and Early Education has called on the Government to address the £662m funding gap.

A formal inquiry by the cross-party group of MPs and Peers found that recent Government policy decisions have put severe financial strain on non-maintained childcare and early education settings.

The APPG, in its report Steps to Sustainability, claims the Government’s flagship 30-hours funded childcare provision for three-and four-year-old children has 'exacerbated' financial challenges across the sector, highlighting evidence that suggests there is around a 20% funding shortfall per child per hour.

Of course, this isn't news to those working and supporting the Early Years sector who have been campaigning for the Government to take action to tackle the increasing problems for a long time.

And you only have to look at the number of childcare providers who have closed, or anticipate having to close in the near future, to realise there is a genuine need for urgent action.

The report reveals that settings are struggling with:

  • Rises in business rates, with some facing a doubling of their rates. The report calls for business rates to be scrapped for PVI settings in England, as has already been done in Scotland and Wales.
  • Rises in pension contributions, increases in the national minimum wage and the introduction of the national living wage which have all led to bigger outgoings for providers, yet Government funding for providers has not risen in-line with these changes.
  • Difficulties with the recruitment and retention of staff, with providers experiencing an increase in the movement of staff away from childcare and into other roles due to low pay.

The APPG is demanding that the Government uses the forthcoming Spending Review to provide urgent financial support to address the funding gap and undertakes a series of measures to support the long-term sustainability of the sector.

Unsurprisingly, the report has been welcomed by key members of the Early Years sector.

Neil Leitch, Chief Executive of the Early Years Alliance, said: “This report...deserves a considered response.

"It’s time for them [ministers] to accept that underfunding is causing a crisis of sustainability in the sector that’s putting downward pressure on quality and forcing up parent fees.

“The simple fact is there’s a huge and growing shortfall in Early Years funding and it’s leaving many providers, especially those in disadvantaged areas, with little option but to close.

“It’s beyond time ministers got a grip of this situation and recognise that only Government can intervene to safeguard the long-term sustainability of the sector by increasing fees and committing to an annual review."

Purnima Tanuku OBE, Chief Executive of the National Day Nurseries Association, said: “We all want to see a successful and resilient Early Years sector because that is how we get the best possible outcomes for our children.

"As the report shows, the Government’s policies are putting that all at risk.

“The report has to be a wake-up call to ministers, and hopefully the new Prime Minister, that the Early Years needs urgent attention.

"The forthcoming Spending Review presents an opportunity to get this right, but there are steps around business rate relief and universal credit that can be addressed straight away to support parents and providers.”