The announcement of an additional £20m into childcare adds to a package of measures which includes:
- Changing the rate paid to providers from £5.00 per hour to £6.00 per hour for funded childcare places increasing this payment by 20%
- Making Business Rate Relief permanent for childcare premises
- Reviewing the childcare rate every year, instead of once every three years
- Allowing a 20% uplift in the amount providers can charge parents to meet food costs
Whilst the increase in support may come as a relief for some settings, there are fears from many within the sector that this funding will not be enough to overturn the challenging circumstances childcare providers are facing. We note that the Cabinet Secretary, Mark Drakeford MS, suggested possible conversations could take place between the draft budget and the final budget, which may result in enhancing support to the childcare sector. We look forward to hearing the outcomes of these conversations.
Our evidence suggests that:
- Many of our members indicate that £6.00 is insufficient to sustain their services[i]
- Minimum wages increase in April 2025 by 6.7% and have increased by 28.5% since 2022. This is relevant because the childcare sector pay is low, and many providers are only able to sustain pay closely aligned with minimum pay[ii]
- Utility costs and related operational costs have risen substantially since 2022
- Childcare owners recently called for £8.80 per hour[iii]
- Business rates relief does not support charity-sector providers of childcare, or those working from community buildings
CEO of Early Years Wales, David Goodger, said
"I acknowledge that the Welsh Government is providing further support to the childcare sector in Wales. The 20% uplift, alongside the annual review, means that the Welsh Government is taking positive steps to look at the systems that support the childcare sector which is welcomed. However, the delay in addressing the needs of the sector from 2022 to 2024, the impacts of austerity and inflation, and the limitations of this offer are concerning.
In 2023, our members demonstrated that they felt they could sustain their services for 1-2 years based on their current budget models[i]. We will be asking our members about their views on the new rate, alongside the prospect of meeting another 6.7% increase in Living Wage costs.
This is important because I know many owners, managers, and governing boards will be looking long and hard at their costs and whether they can sustain their businesses and charities, staff retention, and whether they can continue to offer the families in their communities the funded places on the Childcare Offer".
gov.wales
gov.wales