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Campaigners have warned families will foot the bill as new research reveals a £500million shortfall in childcare funding.

The government has trumpeted its 15 hours a week of free childcare for all three and four-year-olds, together with 30 hours for three and four-year-olds whose parents work.

But a new study says the government's attempts to help those families actually risks increasing costs for more than 900,000 because of the shortfall.

Research agency Ceeda said nurseries are facing an average funding shortfall of 17% to deliver places for three- and four-year-olds and a 32% shortfall for two-year-olds.

This is because the average hourly cost to private, voluntary of independent nurseries and pre-schools of providing funded two-year-olds places is £6.90.

Yet the average government funding rate is £5.23 – a shortfall of £1.67 or 32%.

The average hourly cost of providing three-and four-year-old places is £5.08, compared to a government funding rate of £4.34 – a shortfall of 74p or 17%.

(Image: PA)

As a result, Ceeda calculates a total shortfall of around £500million a year.

This figure takes into account additional early years funding providers can receive via the Early Years Pupil Premium, Disability Access Funding and SEN inclusion funding

The research also notes that the majority of early years providers use the income from three-and four-year-old places to cross-subside significant losses made on places for younger children.

The government has confirmed that early years funding levels are set to remain frozen until at least 2020.

Meanwhile the rise in the national minimum wage puts more pressure on providers to find savings as staff wages rise.

And it follows criticism issued by the Treasury Select Committee, headed by former education secretary Nicky Morgan, which said the government was using “misleading” funding figures, and called on government to “pay a higher hourly rate to providers”.

(Image: Getty (stock))

Ceeda was commissioned by the Pre-school Learning Alliance, which is campaigning for more cash for nurseries.

Chief executive Neil Leitch said: “Time and time again, we have told the government that there simply isn’t enough money in the system and time and time again, they have denied that there is any problem.

"But these independent figures prove that the childcare sector’s concerns are completely justified."

A Department for Education spokesperson told Nursery World: "We are spending more than any other government on childcare – including £1billion every year to deliver 30 hours of free childcare and fund the increase in rates we introduced last year.

"The rollout of 30 hours for working parents of three- and four-year-olds has been a success, with 294,000 children now benefiting.

"As with any new policy, we continue to keep this under review and have commissioned new research to ensure we’ve got this absolutely right."