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Many childcare providers across Wales will be forced to close due to the unsustainable funding model imposed by the Welsh Government, the sector warned.

Lisa Owen, who has run the Chuckles nursery in Newport for more than 25 years, called for fair funding for providers and parents as she penned a 2,000-name Senedd petition.

Under the Welsh Government’s offer, working parents or those in eligible education or training can receive help towards the cost of childcare for three- and four-year-olds.

But providers receive a £6.40-an-hour rate which Ms Owen warned does not cover the true cost of delivering childcare, with many businesses being forced to run at a loss.

“Childcare providers should not have to fight to survive,” she wrote. “Families should not have to struggle to find care for their children – if we don’t act now, the future of childcare and early years education in Wales is at serious risk.”

‘Disappointed’

In response to the petition, Dawn Bowden, minister for children and social care, said the Welsh Government will invest more than £150m in childcare in 2025/26.

Pledging to review the amount providers receive each year, Ms Bowden pointed to April’s £1.40 uplift in the rate which had been frozen at £5 for three years as inflation spiralled.

She also raised a 20% uplift in allowable food costs and 100% small business rates relief.

But Ms Owen was extremely disappointed by the minister’s response, saying she has to subsidise the childcare offer at the risk of losing her business.

She asked: “Why are childcare providers having to fund the difference between the rate the Welsh Government has decided and the rate the setting needs to charge to be sustainable?”

‘Annoying’

The petitioner said: “We are not asking for an increased rate but for the Welsh Government to give us back our businesses by allowing us to charge shortfalls if required, so we can protect the longevity of the business and the future jobs of our teams.”

Ms Owen warned the flat rate and inability to charge for the shortfall meant she lost income of about £75,000, including £50,000 earmarked for a disabled toilet extension.

She said: “It is getting increasingly annoying that the minister keeps writing that the rate was increased by 28% but missing out that in April 2022 the rate was frozen for three years.”

The business owner pointed out that wages increased by 37% in the same period and the UK Government raised employer national insurance contributions (NICs) from April.

She told the Senedd’s petitions committee her award-winning nursery paused investment and will no longer be able to take on apprentices nor pay the real living wage.

‘Unreasonable’

In a follow-up letter, the campaigner said: “These all stopped because the Welsh Government will not allow me to charge what I need to be sustainable.”

Ms Owen wrote: “Everyone I have spoken to outside the Welsh Government completely understands our position and how simply this can be rectified. I hope you can see how unreasonable it is to expect a business to support your scheme then be destroyed by it.”

Her nursery was one of a handful in Wales to score “excellent” in all six areas of a joint Care Inspectorate Wales and Estyn inspection in 2023.

“I am not rich,” she said. “Nurseries are no longer ‘honey pots’ due to the huge amount of regulations we have to adhere to and the training we have to fund.

“Everyone is quick enough to say we are expensive but they are expensive to operate: you can’t cut staff, turn the heating down, buy cheaper materials.

“It’s a passion and we do what we do to survive.”

‘Rhetoric’

The National Day Nurseries Association Cymru welcomed the £1.40 increase but warned the £6.40 rate was still expected to leave most private nurseries with a shortfall.

The effective rate for childcare providers ranged from £7 to £10 an hour, according to an Early Years Wales report which warned of pressures from wage growth, inflation and NICs.

One provider told the umbrella organisation: “Rhetoric alone won’t change outcomes for children. Investment, collaboration and a long-term commitment to early years support will.

“Ministers must now translate their words into tangible actions that ensure every child in Wales has the strongest possible start in life.”

At its meeting on July 14, the Senedd’s petitions committee decided to write to the minister, seeking a response to Ms Owen’s concerns while keeping the petition open in the interim.