Kent nursery and childcare providers blast ‘underfunded’ government free nursery place scheme rollout

Nurseries and childminders across Kent say they are being “set up to fail” and could be driven out of business by “underfunded” changes to the government’s “free” childcare offer.

Early years providers are calling for increased funding and a delay to new rules as they warn the current system is unsustainable and they’re being asked to offer a “champagne service on a lemonade budget”.

The government-introduced changes, which take effect on April 1, will extend eligibility for funded childcare to include working parents of children as young as nine months, offering 15 hours per week.

From September, this will increase to 30 funded hours per week, bringing younger age groups in line with the current offer for three- and four-year-olds.

But early years providers say the numbers simply don’t add up and the funding doesn’t cover the actual cost of running their businesses at a time when National Insurance and minimum wage hikes are also “massively” impacting them.

For Charlotte Roles, deputy manager at Dimples Day Nursery in Darenth, near Dartford, the pressure is becoming overwhelming as she warns extra costs will likely be passed on to parents through higher fees in order to scrape by.

Her nursery became the first in Kent to receive a sixth Outstanding Ofsted report in 2023 having scored consistently top marks since its inception in 2002.

But now, the early years provider, which boasts a forest school, yoga classes and gardening faces an uncertain future.

“We want to give children the best start in life — but with all these changes, it’s becoming impossible to run a business like this,” explains Charlotte.

The National Day Nurseries Association (NDNA), an organisation which represents and supports nurseries across the UK, estimates the 'average nursery’s operating costs will increase by £47,000 from April due to National Insurance and minimum wage rises alone.

And with the government’s funding for free places failing to square up with real-time costs, the funding gap is forcing nurseries to make “difficult decisions, warns Charlotte.

“Our wage bill has gone up massively, but staff won’t see any benefit from it,” she added.

“We already pay fairly, but now we have no choice but to raise nursery fees.

“The government hasn’t thought about how this affects providers or parents.”

And it’s not just nurseries feeling the pinch.

Childminders, who care for children in their own homes, claim they’re often left out of the conversation despite also being expected to offer “free” funded places.

“We might not have the same overheads,” said Rebekah Ash-Vie, an Ofsted registered childminder based in Greenhill, Herne Bay, “but we’re still being pushed to offer these funded hours.”

“The rates don’t cover what we’d usually charge,” she adds.

The childcarer said the funding for babies and two-year-olds is manageable, but once children turn three or four, the hourly rate drops below what most childminders charge privately.

We’re expected to offer a champagne service on a lemonade budget

“Every hour we work for the government, we’re making a loss,” she added.

“We’re expected to offer a champagne service on a lemonade budget.”

From September, eligible parents will be entitled to even more funded hours.

But both Charlotte and Rebekah warn the system isn’t ready.

“Ratios for younger children are higher, which means we’ll need more staff,” Charlotte said.

“Funding doesn’t cover things like baby food, nappies, or the extra care these children need.”

Rebekah agrees, adding that limited space, rising costs, and tighter rules make it difficult for childminders to take on more funded children.

“We’d love to help more families, but without more support, it just doesn’t work,” she said.

The NDNA warns 80% of the hours in an average nursery will soon be government-funded, leaving fewer opportunities for providers to make up the shortfall through private fees.

Since this support does not fully cover the actual expenses of providing childcare, nurseries will have fewer opportunities to make up the shortfall through privately paid hours, making it harder to stay financially viable.

To add to the pressure, new government charging guidance says that nurseries and childminders can charge for extras like meals and activities — but those fees must be voluntary.

The NDNA has criticised the lack of consultation on this policy and is seeking legal advice.

“Nurseries are already following best practice in being transparent with parents about extra charges, but this new wording could seriously threaten sustainability,” said the charity’s chief executive Purnima Tanuku.

Charlotte added: “We explain our charges clearly to parents, but this new guidance makes it sound like nurseries are overcharging when we’re just covering basic costs.”

Another issue has been the last-minute release of key details from Kent County Council (KCC) about how the new scheme will be implemented, despite it taking effect on April 1.

The Education People, an early years advisor for KCC, said they received the government guidance at the same time as providers, leaving little time to prepare.

A temporary addendum has only just been issued, outlining new rules around funding, charging, and invoicing, just days before the rollout is due to begin.

But many nurseries say the last-minute approach still makes it impossible to properly plan staffing, budgets, and logistics, further adding to the uncertainty surrounding the rollout.

“The new rules were announced in February, but we’ve still not been given full guidance from the council,” Charlotte adds.

These costs will be passed onto parents with higher fees as the sector sees little to no government support

Faced with growing uncertainty, early years providers have launched an open letter to the Department for Education (DfE) and a petition calling for more funding and a six-month delay to the “new rules” to allow proper planning and consultation.

The petition warns that without extra support, many nurseries and childminders will have to raise fees, cut staff, or even close altogether. So far, the petition has gained more than 2,500 signatures.

Meanwhile, shadow Education Minister Neil O’Brien (Con) called the government’s budget “a recipe for total disaster” for nurseries.

“Rachel Reeves' Jobs Tax is set to raise costs for providers significantly,” he said.

“These costs will be passed onto parents with higher fees as the sector sees little to no government support

“Once again, it is ideology over national interest with this Labour government.”

The government said in February, as it announced the latest wave of early years reforms, it was committed to delivering on the promises made to working parents, ensuring they can save up to £7,500 on average from using the full 30 hours a week of government funded childcare support, compared to paying for it themselves.

Speaking previously, Education Secretary Bridget Phillipson said: “Giving every child the best start in life is my top priority, and integral to our mission to ensure tens of thousands more children are school ready every year.

“That’s why despite the inherited challenges we face, we are pressing ahead with the investment and leadership needed to support families and make sure that every child, regardless of background, can access the high-quality early education they deserve.”

But with just days before the new childcare scheme takes effect, nurseries say they are still in the dark about how it will work.

“We all want to support families,” added Rebekah.

“But without realistic funding and proper planning, we’re being set up to fail.”

A Department for Education spokesperson said: “Giving every child the best start in life is central to our mission to break the unfair link between background and success, and through our Plan for Change, we’ll get thousands more children school-ready by aged 5.

“That’s why despite having to take tough decisions to fix the foundations of the economy, we are raising spending on the early years entitlements to over £8 billion next year and we have announced the largest ever uplift to the early years pupil premium, increasing the rate by over 45% compared to 2024-25.

“On top of this, we have recently announced details of a targeted £75 million grant to support the increase to 30 government funded hours from September, alongside our strengthened guidance to make sure that parents do not face unfair charges to access a place.”