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By Rachel Lawler

 

The has warned that the government risks making childcare “affordable only to the wealthy” in a new report.

 

The report, , follows a formal inquiry into sustainability in the childcare sector. It claims that the 30-hours offer has “exacerbated” financial concerns in the sector.

 

It also suggests that there is a 20% funding shortfall in the sector, as early years settings face increased minimum wages, rising business rates and recruitment concerns.

 

The report argues that if the funding gap is not addressed in the next Spending Review, the number of childcare places in deprived areas could significantly drop.

 

It states: “We risk facing a situation where only wealthy families are able to access childcare services, leading to a reduction in educational opportunities for children as well as more challenges to parents looking to go back into work.”

 

The report also recommends that the government commits to an annual review of the cost of delivering funded childcare, business rate relief for providers and a change in the universal credit system to make payments directly to providers instead of parents.

 

Tulip Siddiq, chair of the APPG for Childcare and Early Education, said: “With the Spending Review just around the corner, and a new Prime Minister soon to enter Downing Street, this report is being published at a critical time.

 

“We urge the government to take on board our recommendations and provide the urgent funding and support needed to successfully, and sustainably, deliver its childcare policies.”

 

Neil Leitch, chief executive of the Alliance, added: “This report and its recommendations are the result of a year of hard and serious work by the APPG to understand the early years funding crisis.

 

“It deserves a considered response. It simply will not be good enough for ministers to respond by trotting out lines about record spending, happy parents, or a lack of will from providers to make things work. It’s time for them to accept that underfunding is causing a crisis of sustainability in the sector that’s putting downward pressure on quality and forcing up parent fees.”