The early years funding shortfall is having a profound impact on the poorest families in England, according to a new study by independent research agency Ceeda.

The research reveals that the early years funding shortfall has risen by almost £50m in the last year to £662m and almost one in five childcare providers in England's most deprived areas anticipate they will have to close in the next 12 months. This is more than twice as many providers than in more affluent areas.

Ceeda surveyed 356 private, voluntary and independent childcare providers about the cost of delivering quality childcare. Early years providers said that they were forced to make cost savings as a result of the funding shortfall, with 43% cutting back on learning resources and 19% saying they had to lower the quality of food given to children in order to make ends meet.

Many providers are forced to pass on the funding shortfall to parents and one in five said they now required private hours to be taken alongside the government's funded childcare, making it even harder for disadvantaged families to afford. Others have limited the number of funded places they offer.

Dr Jo Verrill, managing director of Ceeda, said:

"Statutory pay rises, increased pensions contributions and rising business rates are fuelling provider costs, whilst funding rates remain fixed.”

"Childcare providers have little choice but to try a range of strategies to recoup or limit losses, from caps on funded places, to cuts in staffing levels.”

"Whilst a logical response to financial pressures, these actions have important consequences, particularly for those families least able to pay for early education."

The full report can be found here.

Last reviewed 17 June 2019