Nursery owner says new funding 'wholly inadequate'

A nursery owner fears "wholly inadequate" government funding provision could lead to the closure of businesses in her industry.

Karen Richards, who runs Wolds Childcare, said a series of changes including National Insurance, minimum wage and hours entitlement were all putting the sector under extra pressure.

Currently, children over nine months and under three years get 15 hours of government-funded childcare but from September this will increase to 30 hours, which is already offered to three and four-year-olds.

Mrs Richards said the hourly rate being offered did not come close to covering the mounting costs of providing her service and the pressure had left her in tears.

Wolds Childcare has six locations in Nottinghamshire and Mrs Richards said the organisation was proud of the number of activities it offered.

But she felt the changes announced - designed to give more families access to childcare - risked making the situation worse by underfunding the extra time offered.

The basic hourly amount offered in Nottinghamshire is currently £5.47 for 3 and 4-year-olds, £7.63 for two-year-olds and £10.38 for under twos.

Mrs Richards said: "Essentially the government funding is a contribution towards early years education because in the vast majority of cases it is not equitable to the real costs.

"The funding covers the cost of basic childcare, so a staffing level that meets basic government ratios on minimum wage and basic books and craft materials.

"But it doesn't allow for the enhancements which most of us provide - such as highly qualified and experienced staff, music and dance classes, specialist language and art teachers and so on.

"So actually, what is called 'free' childcare is actually just a subsidy."

Mrs Richards estimated the real hourly cost for 3 to 4-year-olds as £8.50 and said the gap was being filled by parents paying extra.

And while she said her staffing costs were rising by 13% - National Insurance alone costing an extra £183,000 per year - government funding was being increased by between 2.5 and 4.4%.

She felt instead of allowing more families to access childcare, the funding shortfall could lead to nurseries closing and creating "childcare deserts".

She said: "I have lost count of the hours, I would be lying if I didn't say I had been in tears over it, it really is exhausting.

"Mentally - I can tell you this because I speak to lots of providers - their mental health is shot.

"We want to provide the best for our children and our families and the government is making us look like greedy rip off nurseries.

She added: "This is not workable and its not fair.

"It's not fair to providers, it's not fair to parents but ultimately it is children who are going to suffer so please reconsider."

A Department for Education spokesperson said the early years entitlements for 2025-26 were a 30% increase compared to 2024-25.

They said: "Despite having to take tough decisions to fix the foundations of the economy, we are raising spending on the early years entitlements to over £8bn next year and we have announced the largest ever uplift to the early years pupil premium, increasing the rate by over 45% compared to 2024-25.

"On top of this, we have recently announced details of a targeted £75m grant to support the increase to 30 government funded hours from September, alongside our strengthened guidance to make sure that parents do not face unfair charges to access a place."

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