The cost of delivering childcare has increased by 20% since last year, according to the Department of Education's Survey of Childcare and Early Years Providers 2019.

The survey reveals that the average annual cost to settings of providing childcare this year is £240,333 - an increase of 20% on 2018's average cost of £199,708. However, the Government’s recently announced rise in early years funding for 2020-2021 is just 2%.

The figures show that staffing is the major cost for providers, amounting to 73% of all spending. This has increased over the last year due to rises in the national living wage and the national minimum wage rates.

The survey also covers areas such as qualifications, fees, special educational needs, 30-hour childcare, number of places and spare capacity.

Neil Leitch, chief executive of the Early Years Alliance, said:

“These figures show just how woefully inadequate the recently-announced increase in early years funding truly is. With ongoing increases in the national living and minimum wages, the cost of running a childcare business has increased hugely over recent years, and yet government investment into the sector has completely failed to keep up.”

“With plans to both increase statutory wage requirements and expand so-called ‘free childcare’ offers being mooted by various political parties, it’s clear that, whoever is successful at next month’s general election, a significant increase in childcare funding will be needed if the early years is to remain viable and sustainable.”

“We urge every political party to include a commitment to ensure adequate investment into the sector in their election manifesto. With the sector already facing a funding shortfall of £662m, and hundreds of providers closing every month, we cannot allow the current situation to continue.”

The full report is available here.

Last reviewed 25 November 2019