Nursery Management: Parent’s Guide - Childcare funding

Be the first to comment

Everything you need to know… but were afraid to ask.


Download the PDF of this article

Download the pdf of this image

  • The average practitioner earns significantly less than most supermarket workers, despite most studying for one to two years for a minimum qualification and one in four having a degree.
  • There is a growing consensus that Government funding for schemes such as the 30 hours does not keep up with rising costs.

Why is childcare so expensive?

For some parents, childcare is more than a mortgage payment each month. For this reason, the Government has created schemes such as 30 hours (see box).

Yet childcare is a low-paid sector. The reason it costs parents so much is because a relatively high number of staff are needed to run a nursery.

Government-set ratios are in place for a minimum number of adults per child to ensure safety and a good standard of education and care.

How much does an average childcare worker get paid?

The average early years practitioner earns just £8.49 per hour.1 This is just 2p more per hour than an average cleaner’s wage and 71p an hour less than a job at Sainsbury’s. More than two-fifths of staff are claiming benefits and tax credits2.

Managers of nurseries earn on average £13.43.3 This is £7 less per hour on average than a teacher. Yet a manager’s job includes huge responsibility: they are ultimately responsible for the education, safety and welfare of all the children in their setting – and the viability of their business.

What training does a practitioner need?

The vast majority of staff in the childcare sector have at least a Level 3 (A-Level equivalent), which requires either two years of college-based study with extensive work placement, or one year of on-the-job training. Twenty-five per cent of childcare staff have a degree or higher.4

Aren’t nurseries raking it in?

No two nurseries will be the same, as location and size play a big role in profitability. But rising wage costs, rent, business rates, equipment and staff training costs have put huge pressure on many operators’ budgets. More than half (57 per cent) of nurseries said they weren’t expecting to make a profit last year.5

What about Government funding?

Investment in the early years from Government is a considerable overall sum – £6bn in 2019 and 2020 (around half of which goes to cover 30 hours and funded two-year-olds).

On average, the rate paid to providers for three- and four-year-olds per hour across England is just £4.46. Current funding levels are based on an analysis of costs in 2015 and are frozen until 2020.

Funding rates fail to reflect increases in the National Living Wage, pension contributions and inflation.6 Eighty-seven per cent of nursery owners say funding rates do not cover their costs.7

Teaching unions, Ceeda, the Education Policy Institute, the NDNA, Early Years Alliance and MPs, among others, have all endorsed the idea there is widespread underfunding. ‘The Government’s own figures on how much it provides per hour to fund 30 hours free childcare are often misleading and out of date,’ the Treasury Select Committee said last year. ‘Some childcare providers are altering their services… the Government… should pay a higher hourly rate to providers that more accurately reflects their current costs.’

The Government says the issue is under review.

What does this mean for my 30 hours?

30 hours is far from being universally available and there’s a good chance it won’t be free in the way the Government has promised. Some nurseries are restricting access to remain sustainable or not offering it at all. Others warn they will need to increase fees. But the picture is varied – for some nurseries, 30 hours has been a boost.

While the number of childcare places provided by nurseries across the country has remained the same, latest Ofsted figures showed a drop in numbers of nurseries, indicating that it tends to be smaller nurseries that are closing.8

The Early Years Alliance closed a fifth of its childcare settings last year, saying underfunding was to blame. Now a cross-party group of MPs and peers are to investigate sustainability.

Nurseries don’t have to offer 30 hours, but risk losing parents if they don’t.


Commonly called the 30 hours of ‘free’ or funded childcare, this is for parents of three- and four-year-olds in England.

MYTH 1 30 hours… is 30 hours per week for a year

It is actually 30 hours per week for 38 weeks of the year (or can be stretched across the year if your nursery allows this).

The 30 hours is two policies: a 15-hour universal entitlement for all families ofthree- and four-year-olds, and an additional 15 hours, for which parental eligibility criteria apply. The Early Years Foundation Stage applies across the whole 30 hours.

MYTH2 30 hours… is free

The policy is taxpayer-funded, and this matters because what is marketed as a free giveaway is in effect a Government subsidy to childcare providers. And for a significant proportion of settings, the Government hourly rate, distributed via councils, is less than the rate the nursery would normally charge.

MYTH 3 My nursery can’t charge additional fees under the 30 hours

The DfE has said, ‘Our guidance makes clear that providers may charge for additional services such as lunches, but parents must not be required to buy these in order to take up their child’s free early education place – parents should be offered the option of providing a packed lunch instead.’

But nurseries can impose additional charges in other ways – for example, as a condition of a place at the setting, or on a voluntary basis. With so many settings saying funding does not cover their costs, more are opting for extra charges for things such as meals, consumables (such as nappies or sun cream), or trips.


Send this to your MP and ask for more Government funding for your nursery.

Sign a petition asking for funding to keep pace with rising costs,

Send a letter to your MP – the Early Years Alliance has produced template letters. See

See the NDNA’s parents page,





3. See 1.




7. See 5 8. See 5

blog comments powered by Disqus