The findings from a report by the National Day Nurseries Association show that the contentious issue is affecting nurseries nationwide, with settings in 89 out of 150 local authorities voicing their concerns.
The NDNA said that while nurseries strongly support the free entitlement to nursery education in principle, the Government could not expect them to sustain losses and subsidise what is supposed to be a free place for any child.
In the report the NDNA makes recommendations to resolve the issue, including:
* DfES to carry out a national review on the real costs of the free places to take into account workforce development, and feed results into the Comprehensive Spending Review
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