David Cameron will on Monday pledge to bring forward his plans to double free childcare a year early â€“ although a leading group of nurseries and other providers has warned that the scheme could end up costing many parents more.
The prime minister will accelerate the proposals to increase free care from 15 to 30 hours a week for three- and four-year-olds, with pilots beginning from September 2016. Ahead of legislation being introduced in parliament on Tuesday, he will argue the plans are â€œgiving more people the opportunity to get into workâ€.
But research by the Pre-school Learning Alliance of private and voluntary childcare providers found the policy could create a Â£350m funding gap because hours paid for by the government are currently underfunded. They claim the gap could end up being covered by other parents whose rates would go up to subsidise the new scheme.
Cameron sought to overshadow Labourâ€™s offer on childcare at the election by promising more free hours, but the government is still facing criticism for the high overall costs of childcare. The government is also under pressure over the possible impact on family budgets of changes to welfare, following reports that Iain Duncan Smith, the work and pensions secretary, is looking at plans to cut child benefit.
Labourâ€™s shadow work and pensions secretary Rachel Reeves said millions of working families would lose money if the reports were true and urged Cameron to â€œcome clean with the public about their plans to cut child benefit and child tax creditsâ€.
Harriet Harman, Labourâ€™s acting leader, has also promised to hold Cameron to account over what he has promised on childcare, noting the cost for the average family has soared by Â£1,500 a year since 2010. â€œThe rhetoric might be promising, but the reality is that childrenâ€™s centres have closed and the cost of childcare has soared,â€ she said last week.
Priti Patel, a Conservative employment minister, denied claims that
the plans would lead to worse outcomes for parents.
â€œFor a start our focus is on quality and the quality continues to
improve with 80% of providers now judged to be good or
outstanding compared to less than 70% back in 2010,â€ she told BBC
Radio 4â€™s Today prgoramme.
â€œI think whatâ€™s important to say here is that with what weâ€™re announcing with the increase from 15 to 30 hours, is that Iâ€™ll be chairing a government-led task force on the delivery of this and we will be working with providers on the point about funding, to review the overall funding model so that we can bring an
uplift to the hourly rate for childcare entitlement which strikes the right balance.â€
Asked about the fact it would be available to all but the very highest earners, she said: â€œThis isnâ€™t about subsidising well-off people. This is about providing childcare, affordable childcare, and increasing childcare provision for working families.â€
No 10 said the government is committed to increasing the average childcare funding rates paid to providers, with the Department for Education to shortly begin a review into rates overseen by childcare minister Sam Gyimah.
The research conducted for the Pre-school Learning Alliance found that the government currently underfunds childcare providers, meaning that many have to subsidise their full cost by charging the children of other families higher hourly rates.
â€œThe so-called free childcare scheme is nothing of the sort. For years now, the initiative has been subsidised by providers and parents because of a lack of adequate government funding,â€ said Neil Leitch, chief executive of the alliance, whose 14,000 members include private and voluntary daycares and nurseries.
â€œWhile we of course welcome the drive to improve the availability of childcare in this country, these figures clearly show that the governmentâ€™s plan to extend funded childcare hours simply cannot work without a substantial increase in sector funding.â€
A spokesman for the Department for Education said the extension to 30 hours a week â€“ worth around Â£5,000 a year â€“ would help families with childcare costs, as well as allowing providers to expand and encouraging new ones to open.
â€œWe also recognise the importance of funding rates, which is why we have already committed to increase average childcare funding rates, with the review set to begin before summer,â€ the DfE spokesman said.
The study found that private nurseries would lose Â£660 a year for each child taking up the extended entitlement, if government funding remained at current levels.
The total cost to private providers after the extension to 30 hours is estimated to be Â£1.95bn each year â€“ but government funding only covers Â£1.7bn, leaving a shortfall of Â£250m. Private daycares also face a shortfall of more than Â£100m on the governmentâ€™s existing offer of free childcare to some two-year-olds.
The research also suggests the Conservatives underestimated the potential costs of the new policy. Instead of the Â£350m extra spending that the party claimed during the election campaign, the researchers estimate that at current rates the policy would cost Â£1.5bn if each eligible child took their extra 15 hours.
â€œWhile we recognise that the Conservatives have promised to review local funding rates, the fact that they chose to estimate the cost of extending funded childcare before finding out how much funding rates will need to increase raises serious questions as to how meaningful such a review would be,â€ Leitch said.
â€œSimply raising rates by a few pence per hour will do little to address the current situation.â€
The research was backed by a separate report from the Professional Association for Childcare and Early Years (Pacey), which found many providers â€œare being forced to cross-subsidise their free places through higher fees or retracting the number of funded places, both undermining governmentâ€™s aims to increase the affordability, accessibility and quality of early years educationâ€.
Liz Bayram, Paceyâ€™s chief executive, said: â€œThese findings should provide serious cause for concern for the government.
â€œNow that a commitment has been made to extend the number of free early education places, the challenge remains how to ensure the childcare sector is supported to deliver these places.â€