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The government is to invest £400m in its plans to expand free childcare for working parents in England from April.
The Department for Education (DfE) has also announced an increase in funding rates for nursery places.
Its hourly rates available to providers will be £11.22 for under-twos, £8.28 for two-year-olds, and £5.88 for three and four-year-olds.
Providers called it a “welcome increase” but said demand for places could soon outstrip capacity.
The expansion was announced In the Budget earlier this year, Chancellor Jeremy Hunt said the current scheme offering some families 30 free hours of childcare per week would be extended to cover younger children.
It was intended to help 60,000 more parents of young children back into the workforce.
Eligible working parents of three and four-year-olds already receive 30 hours a week of government-funded childcare.
From April, working parents of two-year-olds will be able to access 15 hours of funded childcare.
And from September, this offer will be extended to children aged nine months and above, increasing to 30 hours from September 2025.
Eligibility depends on each parent or carer earning more than the equivalent of 16 hours at the National Living Wage per week.
And the government said its increases from April 2024 reflected increases in the National Living Wage.
In September, hourly funding rates increased from an average of:
£5.29, for three- and four-year-olds, to £5.62
£6.00, for two-year-olds, to £7.95
Education Secretary Gillian Keegan said the government was “making sure parents no longer have to choose between a career and a family”.
But childcare providers in England have long raised concerns over funding not matching demand for places.
Over the summer, an Education Select Committee report found underfunding had left the sector “straining to provide” enough places for children.
Robin Walker, who chairs the committee, said the childcare market faced significant challenges in “affordability and availability”. And new funding rates would have to “accurately reflect the costs of providing high-quality early education and childcare” if the government was to successfully extend the number of free hours available to parents.
Nicola Fleury, who owns the Kidzrus Nursery Group, in Salford, Greater Manchester, said four of her five nurseries were already close to capacity.
“We’re going to have to look around at where we can accommodate these places. I just hope that for some settings it isn’t too little, too late,” she said.
“It is a very welcome increase but I just hope it makes a real impact.”
Early Years Alliance chief executive Neil Leitch also said the funding increase was “welcome” but “still likely to fall short of what the sector needs to successfully deliver the 30-hours expansion in the long term”.
“With the start of the expansion just months away, it remains to be seen whether there is any hope of this policy actually working in practice,” he added.
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