This month marks the third and final phase of the largest expansion of funded childcare in England’s history, with parents of nine-month-olds now able to benefit from up to 30 hours’ funded childcare .

When Jeremy Hunt, the former chancellor, stood at the despatch box in March 2023 to announce the plan, parents across the country (and those planning families) dared to hope for relief from the sky-high fees that had characterised the early years for many.

Sector experts were less enthusiastic, though. They warned of staffing shortages, threats to quality of provision and a possible contagion of underfunding spreading through the system.

Underfunding of early years

Two and a half years on, our research with parents and providers shows that those warnings were right. In our recent survey of more than 800 early education providers, 44 per cent told us that they cannot meet the demand created by the expansion.

This concern is driven by a mix of financial pressures and staffing shortages.

The increase in employer national insurance contributions in April and rises in the minimum wage have hit the sector hard. Funding rates have not increased to account for these extra costs, placing increased strain on an already fragile system in which settings are being asked to do more with less.

Providers are taking difficult decisions to mitigate that pressure. One in six have cut funded places, and a further 20 per cent are considering doing this ahead of September.

Worryingly, nearly a quarter have reduced places for children with additional needs because they cannot afford the specialist support. And over a quarter have frozen recruitment.

Parents are feeling the impact of those decisions. In our annual Pulse Check report, using polling from More in Common, 69 per cent of parents of under-5s said they were concerned about the availability of childcare - and this proportion rose to 75 per cent for parents of children with special educational needs and disabilities (SEND). The challenge of both cost and availability has forced 15 per cent of parents to quit their jobs in the past year.

Proper investment needed

This all seems at odds with the Labour government’s Giving Every Child the Best Start in Life strategy.

This is a welcome and encouraging vision of how early years could look. It promises transformation, recognising the complexity and inequality of the current model. But it dodges the one thing that would guarantee the success of this expansion: proper investment.

Without adequate funding, providers can’t grow places to meet demand, nor can they grow their workforce.

Recent announcements about introducing a professional register and attracting more men into early years are laudable, but unless the government is prepared to tackle the thorny issue of low pay, it will never grow the early years workforce to meet demand, let alone improve its status or diversity.

That requires more investment, starting with funding for three- and four-year-olds, which continues to be well below where it needs to be. Modelling by London Economics and Save the Children estimates the annual shortfall in funding to be £388 million.

The Autumn Budget is a chance to rectify this and provide the investment the sector needs to deliver, but the government can’t stop there.

Sustainable support

Funding needs to be addressed in a sustainable way that provides the sector with reassurance, the workforce with decent pay and the taxpayer with value for money.

The Early Years Funding Formula consultation planned for 2026 could be the opportunity to deliver all of this, with its focus on workforce stability and quality.

To do so, the formula must ensure that funding accounts for wage differentials - an important lever in retaining staff - and covers any future hikes in national insurance and employment costs, so that settings are not compromising on access or quality in order to stay afloat.

The government will, of course, remind us of its “inheritance” - the £22 billion funding black hole where, it seems, ambition goes to die.

But if it insists that there is “no more money”, the sector will insist there is “no more childcare”, because - simply put - meeting demand and the promise of the government’s strategy requires greater investment.

Without it, Labour’s Best Start plans may be reduced to a false start.

Sarah Ronan is director of the Early Education and Childcare Coalition

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