Documents reveal ministers invested less than two-thirds of required ‘cost of properly funding childcare’

Government urged to carry out independent review into funding and affordability of childcare

The Organisation for Economic Co-operation and Development previously found UK has one of the most expensive childcare systems worldwide

The government invested less than two-thirds of what its own officials estimated was the cost of properly funding the childcare sector, according to documents released after a two-year secrecy battle.

‘Early years’ funding rates for 2020/21 were below the amount calculated necessary to pay for the ‘free childcare‘ initiative in which working parents of three and four-year-olds in England 30 hours’ free childcare a week.

The documents were seen by the Early Years Alliance, which represents nurseries, pre-schools, and registered childminders, after a long-running Freedom of Information campaign.

It comes as over 107,000 people signed a petition urging the government to carry out an independent review into the funding and affordability of childcare in the UK.

Neil Leitch, chief executive of the Early Years Alliance, said: “For years, the early year's sector has warned that the so-called ‘free entitlement’ offer is anything but free, in the face of repeated government claims that the policy is adequately funded.

“These documents, which they spent more than two years trying to hide, prove otherwise. The early years of a child’s life are critical to their long-term learning and development – and yet ministers have been all too happy to force providers to work to maximum ratios, inevitably reducing quality, in order to save the treasury some money.

“For so long, the government has tried to deflect the blame for rising childcare costs. But these documents prove, in black and white, that it knew that the introduction of the 30-hours policy, along with an insufficient level of investment, would result in higher costs for parents of younger children.”

Mr Leitch warned early years providers and parents are tired of being “forced to pay the price” for this “underfunded policy year after year” as he called for the government to carry out a thorough review of early years measures in the UK.

In a speech at the Alliance’s annual conference on Tuesday, Mr Leitch will accuse the government of “shamelessly, knowingly underfunding our sector”.

“They knew that the level of funding they gave to us would impact on quality,” he will add. “They knew it would put prices up for parents. And they did it anyway”.

The Organisation for Economic Co-operation and Development (OECD) previously found the UK has one of the most expensive childcare systems worldwide.

The petition calling for an independent review, launched by campaign group Pregnant then Screwed, states: “We have the second most expensive childcare system in the world. A full-time place costs, on average, £14,000 per year, making it completely unaffordable for many families.

“Parents are forced to leave their jobs or work fewer hours, which has a negative impact on the economy and on child poverty.

“Childcare workers are paid so badly that 1 in 10 are officially living in poverty. Meanwhile, a lack of funding has resulted in 2,087 childcare settings closing in England in the first 3 months of 2021 when provision was already low.”

A previous study by Pregnant Then Screwed found almost one fifth of parents have been forced into quitting their jobs due to the extortionate cost of childcare in the UK – with researchers saying it is predominantly women bearing this burden.

The childcare sector has been plunged into further chaos in the wake of the Covid crisis – with a recent study carried out by the Labour Party revealing almost 20,000 childcare providers are at risk of permanently closing their doors within six months.

In a major blow to childcare services, the government recently changed the funding model for nurseries, childminders and pre-schools following the sharp reduction in the number of children using providers since the pandemic.

The Department for Education has been approached for comment.