The Welsh government has announced an extra £6 million per year to increase the hourly rate for the Childcare Offer for Wales from £4.50 to £5 per hour from April.

This includes additional funding of £1.5m to support the continued alignment of the Foundation Phase funding rates under the Childcare Offer and an additional £3.5m investment in Flying Start childcare. The Deputy Minister has also committed to review the rate at least every three years.

Childcare businesses will be hit with rises in the NLW and the NMW from April; energy costs, NI contributions and inflationary price rises. NDNA Cymru is keen for the Welsh government to review the rate regularly so it continues to support childcare providers to remain sustainable.

Purnima Tanuku OBE, chief exec of National Day Nurseries Association (NDNA) said: “Nurseries and childcare providers will welcome this increase in funding rates from the Welsh government.

“Settings and providers have faced an incredibly difficult few years with the stresses the pandemic has put upon them. We were very pleased with the announcement from the Welsh government in September 2021 that extended business rates relief for another three years. Nonetheless, with rising costs for energy, food and staffing, operating costs are continuing to be driven higher and providers will be faced with an untenable position.

“NDNA Cymru has presented evidence of the rising costs of delivery and pressures on the sector. We have been calling for a rise in the Childcare Offer and The Foundation Phase must be continually aligned with this.

“It is vitally important that government funding for early years and childcare places keeps pace with these ballooning costs, especially in a time of such economic instability. We welcome the commitment to regularly review the funding but this may need to happen more frequently if cost pressures continue to increase. Inflation is drastically rising and a commitment to review the funding every three years is beneficial in principal, but not frequent enough to help nurseries with these pressures. Reviews need to be carried out on a more regular basis. “This uplift will help ensure greater sustainability for the sector – meaning families will be able to access the high-quality early education and care places they need. This investment in children’s futures supports their development and life chances but is also vital for allowing parents and carers to work, study or retrain.”