The London Mayor should lobby the government to review early years funding rates in the capital, according to a London Assembly committee.

An investigation by the London Assembly Economy Committee found the city has the highest childcare costs in the country. It reported childcare costs in London are between 25% and 33% higher than the UK average.

The committee’s report, Childcare in London, highlighted a risk that the sector will struggle to cope with the expected rise in demand for places when funded hours are extended to children under the age of three. It found childcare providers spend more on wages and rent or mortgages in London than in other parts of the country

The committee heard evidence from organisations including the Early Years Alliance, National Day Nurseries Association and campaign group Pregnant Then Screwed. A survey of London parents found limited childcare availability, and long waiting lists for places.

Childcare in London makes eight recommendations including:

• The Mayor of London should lobby the government to ensure funding rates meet the costs of high-quality provision in the capital
• The Mayor and Deputy Mayor for Children and Families, working with London Councils, boroughs and the childcare sector, should carry out a London-wide review of the sector to understand the challenges it faces
• The Mayor and Deputy Mayor for Children and Families should investigate the barriers to childminders working from private and social rented accommodation
• The government should take action to simplify the system of shared parental leave to increase take-up..

Marina Ahmad, chair of the Economy Committee, said: “While we welcome the Government’s plans to expand the free entitlements for children under the age of three, we are concerned that the childcare sector in London will struggle to cope with the expected rise in demand for places. If we do not take action to address this soon, even more families and even more children will be driven out of London.”

Purnima Tanuku, NDNA chief executive, said: “We would whole-heartedly support the first recommendation to review the funding rate to ensure they enable providers to deliver high quality provision which all children should be entitled to receive. With many local authorities including London boroughs reporting an underspend in their early years budget we want to see all funding reaching providers on the front line.”

Neil Leitch, chief executive of the Early Years Alliance, said:  “Of course, while it’s clear that the capital is on the brink of a childcare and early years crisis, we must not forget that providers across the remainder of the country are also grappling with the very same issues, resulting in more than 3,000 settings closing in the last year alone. 

“As such, while we agree that the funding rate in London must be increased to match the reality of delivering high-quality early years places, the same action must also be taken for the remainder of the country if there is any chance of settings being able to sustainably deliver both existing and upcoming early entitlement hours.”