**Concerns Mount as Welsh Childcare Providers Warn of Looming Closures**
Childcare providers across Wales are raising the alarm over what they describe as an unsustainable funding model, cautioning that without substantial intervention from the Welsh Government, many nurseries and early years settings face imminent closure. The call for urgent action comes amid warnings that the future of children’s care and early education hangs precariously in the balance.
Lisa Owen, proprietor of Chuckles nursery in Newport for more than a quarter of a century, has become one of the leading voices in the campaign for fair funding. Highlighting the deepening crisis, Ms Owen recently submitted a Senedd petition backed by 2,000 signatures, appealing for both adequate financial support for providers and realistic measures to support working families.
Under the current Welsh Government scheme, eligible parents – those who are working or enrolled in qualifying education and training – receive assistance for childcare for three- and four-year-olds. However, childcare settings receive a set hourly fee of £6.40 to care for each child. Ms Owen asserts that this figure woefully fails to match the genuine costs of delivering quality care, pushing many nurseries to operate at a financial loss.
“Childcare providers should not have to fight just to keep their doors open,” Ms Owen wrote in her petition. “Families should never be left struggling to secure a safe place for their children – but unless this issue is addressed, the sector in Wales faces a very uncertain future.” Her comments reflect long-standing anxiety among those in the industry, who say chronic underfunding threatens the foundations of early years education.
Dawn Bowden, the minister with responsibility for children and social care, has defended the government’s stance, pointing to a planned investment of over £150 million in childcare during the 2025-26 financial year. Addressing the concerns in a formal response, Ms Bowden outlined measures such as an increase in the provider funding rate from £5 to £6.40 per hour in April, a 20% rise in the cap on food costs, and a continuation of small business rates relief. The minister also pledged that the government would continue to review funding levels annually to ensure they remain appropriate.
Despite these assurances, Ms Owen remains dissatisfied, arguing that the uplift is not sufficient, especially after several years in which the hourly rate remained static despite mounting operating costs. She says her nursery is now forced to subsidise government-funded places from its own resources, a situation that she believes is simply unsustainable.
“The Welsh Government’s model forces providers to swallow the gap between what is funded and the actual cost,” Ms Owen remarked. “We are not asking for excessive increases, only for the ability to charge parents the difference where necessary, so that businesses can survive and jobs are protected.” According to Ms Owen, her setting lost some £75,000 in income over recent years, including money earmarked for vital improvements such as disability access.
The difficulties do not stop at direct funding shortfalls. Ms Owen notes that wages across the sector have soared by over a third since the last substantial funding review, with additional pressures stemming from increased National Insurance contributions for employers. She informed the Petitions Committee that, due to these combined challenges, her nursery had to freeze expansion plans, put a halt to recruiting apprentices, and found itself unable to pay the Real Living Wage to all staff.
The sector’s concerns are reinforced by wider industry bodies, such as the National Day Nurseries Association Cymru. While acknowledging the uplift, they warn that the £6.40 hourly rate still leaves most private providers running at a deficit. Research by Early Years Wales suggested that real operating costs for nurseries range from £7 to £10 an hour, highlighting a persistent funding gap exacerbated by inflation and the rising costs of doing business.
One unnamed provider told the NDNA: “Rhetoric alone won’t change outcomes for children. What we need is concrete investment, collaboration, and a long-term vision for early years support – only then can every child in Wales be given the best possible start in life.”
In the wake of ongoing pressure, the Senedd’s petitions committee has resolved to continue its scrutiny, agreeing to write once more to the minister and keep the petition open until a more satisfactory resolution can be found. The debate looks set to continue, as the future of Welsh childcare hangs in the balance amidst calls for more realistic and sustainable government support.