Childcare providers on the Isles of Scilly have seen the biggest cut in hourly rate in the country for government funded places in the last five years.
Providers on the islands received £4.58 for government funded places for three and four year olds in 2017/18, 17% less per hour than the £5.55 they received in 2013/14. The hourly wage is set to decrease further next year, to £4.30 per hour.
Analysis of Department of Education figures by survey company Ceeda has found that 60 local authorities in England are now paying childcare providers less per hour for funded three and four-year-old places than they were in 2013/14 after adjusting for inflation.
Working parents of three and four-year-olds are eligible for a government-funded nursery place of 30 hours a week during term time.
Neil Leitch, chief executive of the Pre-School Learning Alliance, said parents across the country faced a rise in childcare costs in the future as nurseries, pre-schools and childminders were forced to increase fees and charges to "plug the government funding gap".
“In the worst cases, providers who simply cannot make the books balance will be forced to close their doors for good. This isn’t an exaggeration - it’s already happening.”
A spokesperson for the Council of the Isles of Scilly said: "In 2013-14 the Council funded provision for 2, 3 and 4 year olds for up to 15 hours per week at £5.09 per hour. The introduction of the Government led extended entitlement for 3 and 4 year olds of up to 30 hours funded provision for families, along with the introduction of the Early Years National Funding Formula, has led the authority to reduce the hourly rate to early years providers from £4.84/hour from September 2017, £4.60 from September 2018 and a planned decrease to £4.30/hour from September 2019. This funding level is in line with the minimum floor rate funded by central government grant.
"Whilst the hourly rate paid to providers has decreased, the funded hours available to families of 3 and 4 year olds has doubled. The Local Authority has reduced the hourly rate to ensure that funding the extended offer is sustainable."
It added: "The Local Authority continues to provide a discretionary universal funding offer of 10 hours' provision for 2-year-olds, along with access funding support for working families who live on the off-islands.”