The survey of over 800 childcare providers shows over a third (35 per cent) have already limited the number of government-funded hours on offer, or are considering it.
Providers surveyed said they have put recruitment and expansion on hold as a result of the changes, with many operating at a loss or having to access their reserves as a result of the National Insurance changes for employers and minimum wage rises.
Some early years settings said they are having to accept fewer children with special educational needs due to rising costs.
An analysis by Dr Gillian Paull of Frontier Economics, using data from the Department for Education’s Survey of Childcare and Early Years Providers, has found that on average costs have risen by 4.7 per cent due to a direct effect of bringing pay in line with the new legal minimum rates and to maintain pay differentials for workers above the minimum wage.
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