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  1. ITV Report

Why free childcare is costing our nurseries and pre-schools thousands

Since the government introduced its 30 hours per week funding scheme for 3 and 4 year olds last September, it's saved more than 300,000 working parents an average of £5,000 a year on childcare. But it's come at a huge cost to many childcare providers.

Local authorities receive funding from the government and they pass on a percentage of that to the childcare providers. The rate councils receive and pass on varies across the country.

Why free childcare is costing our nurseries and pre-schools thousands Credit: ITV Anglia

Suffolk County Council passes on 96% of their funding, which equates to a base rate of £4 per hour per child. The nurseries ITV News Anglia has spoken to in the county say that rate doesn't cover their costs.

Noah's Ark Nursery in Bures on the Essex/Suffolk border almost closed earlier in the year. They've had to increase fees for non funded children and are constantly fundraising to cover the shortfall.

"We fundraise to buy new toys, resources and all our craft equipment as well so we shouldn't be in a position where we're fundraising in order to survive.and to take up the shortfall in the funding."

– Jan McShane Noah's Ark Nursery
Why free childcare is costing our nurseries and pre-schools thousands Credit: ITV Anglia

At Melton Day Nursery near Woodbridge, parents who are eligible for 30 hours of free childcare a week, have agreed to pay for extras to help cover the nursery's costs. They pay £12 a day for their child to have qualified teachers and a home-cooked meal.

"It's not free, the government keep saying it's free and they keep telling us how much they're investing but ultimately it's the parents that are paying for it. It's at best a subsidy and know more than that."

– Nicola Cannon, Owner Melton Day Nursery

Nicola says she knows of three settings nearby that have closed in the past year after struggling financially and she believes others will follow if the government doesn't increase the funding.

Why free childcare is costing our nurseries and pre-schools thousands Credit: ITV Anglia

"We will be spending record amounts on childcare by 2020, including £1bn a year to help fund 30 hours free childcare and higher funding rates for nurseries we recently introduced. Thanks to our funding, more than 340,000 hardworking parents benefited from 30 hours in the policy's first year - saving them an average of £5,000 a year on childcare."

– Department for Education spokesperson