Boom in childcare demand leaves a funding black hole

Plan to expand free places set to cost an extra £1bn per year

- KATE DEVLIN, ALICJA HAGOPIAN

Ministers have been warned that the childcare sector is at risk of “collapse” after a boom in demand for free care left a major government scheme in financial peril.

A plan to expand free childcare for British families is set to cost the government an extra £1bn per year at a time when ministers are grappling to fill a gaping black hole in public finances.

Labour has not spelled out how the funding gap will be filled, but experts predict the shortfall will create "substantial pressure" on the government and could put the entire childcare sector under threat.

In an exclusive interview with The Independent, Bridget Phillipson insisted the unexpectedly high takeup - a quarter higher than predicted - was a “good problem to have” and would not leave children without places.

But the education secretary could not guarantee that parents would get a space at their local nursery in September, when the scheme expands to offer eligible children aged nine months and older 30 hours a week of free childcare.

Industry leaders said parents would be left “disappointed” while nurseries warned a lack of staff meant they were already struggling to deliver the government's pledge.

CEO of the Early Years Alliance, Neil Leitch, told The Independent: “One thing is absolutely clear: if 80 per cent of all hours delivered are government hours, and those hours are inadequately funded, the infrastructure will collapse over a period of time.

“I can’t say it will be one year or five years, but you can bet your bottom dollar if you don’t give somebody enough money to deliver a service, at some point they stop.”