Fewer than half of nurseries will be able to offer extended free childcare planned by the government, the National Day Nurseries Association has warned.
The NDNA said underfunding of the scheme meant many nurseries in England would struggle to provide the extended free care for pre-schoolers.
Early years education for three- and four-year-olds is to be doubled from 15 to 30 hours for each week of term time.
The government says the extra free hours will help support families.
Pilots of the scheme are due to begin in the autumn and a full rollout will follow in 2017, under new legislation covered by the Childcare Bill.
But in its annual survey, the NDNA found only 45% of the 485 nurseries questioned said they were likely to extend the number of free hours on offer.
Case study from the nursery floor
I own two nurseries. I get £3.88 per hour at one setting, and £4 per hour at the other.
My break-even point at both settings is £4.55 per hour, therefore I make a loss on every funded hour in both settings.
The government say they have done “extensive consultation” but that beggars belief.
They talked to 54 nurseries, of which, only two were in south-east England, the majority were in north-west England.
The costings for a nursery in the south east are significantly different to those in the north west.
This government will not listen.
It will find that the whole ethos of free childcare will fail unless they engage with the industry and increase funding.
As an alternative, they could move to allowing top-up funding (from parents) by the providers. This would ensure that parents get a discount and providers make a living wage.
Anonymous nursery owner
The NDNA – which represents more than 5,000 nurseries out of a total of about 18,000 in England – said nurseries were currently managing to offer 15 hours of free childcare a week by plugging the shortfall in government funding.
In practice, it said, this meant parents paid a higher rate for the hours their child spent in nursery above 15 hours.
The average nursery had to absorb a loss of about £34,000 a year due to the funding gap, with 89% of nurseries making a loss on free places, it claimed.
The majority of respondents (92%) to the poll were private nurseries, with 7% from the voluntary sector and the rest maintained nurseries.
NDNA chief executive Purnima Tanuku said the nursery sector was “fully behind” the principle of more support for parents.
“But serious funding shortfalls stand in the way of nurseries getting on board, despite their desire to help families with free childcare,” she said.
“Private, voluntary and independent nurseries deliver most of the government’s free places, currently 15 hours per week for all three- and four-year-olds and some two-year-olds.
“But the nursery sector is reluctant to commit to offering more free hours when they already make a significant annual loss – an average of £34,000 per nursery – on the funded places they currently provide.”
But education and childcare minister Sam Gyimah said: “We are backing families and funding the sector, with £1bn extra funding every year by 2020, including £300m annually to increase the national average funding rate, to incentivise and attract providers to deliver the full 30-hour free offer to parents.
“This extra funding was based on an extensive consultation with the sector and our review into the cost of delivering childcare, the most comprehensive analysis of this market ever.
“The NDNA’s survey shows many providers are likely to offer free childcare and thousands of providers and councils also expressed an interest in taking part in our early implementers programme, well in advance of the national rollout.”
Elsewhere in the UK
In Wales, all three- and four-year-olds are entitled to a minimum of 10 hours of free foundation phase early education.
In Scotland, three- and four-year-olds are eligible for 600 hours of free childcare a year (the equivalent of around 16 hours a week during term time).
In Northern Ireland, under the pre-school education programme, there is an allocation of funded places for children in the year before they start school.