Nurseries' futures may be at risk from Government proposals to reform funding and provide all childcare centres with a universal basic rate, the organisation representing councils in London has claimed.

London Councils said a flat rate that does not "recognise variations in running costs" in different areas of the capital could impact providers' long-term stability.

A consultation into the plans, slated for introduction in April next year, closed last week.

Cllr Peter John, London Councils’ executive member for children, said: “More than 140,000 children across the capital benefit from free childcare provided by maintained nurseries.

"These places help support some of the most deprived children in London, particularly where there is a lack of alternative childcare options.

“Setting a universal base rate of funding for all childcare providers will result in many nurseries losing out if they have higher running costs.

“Quality early years education enables children growing up in deprived areas to catch up with their more affluent peers by the time they start primary school.

"It would be huge concern if the new early years funding formula resulted in nurseries reviewing or cutting back the service they provide to families that need it most.”

The organisation has written to Education Secretary Justine Greening with its concerns.

The Government has said it will provide supplementary funding of £55m a year to councils for maintained nursery schools for at least two years.

The teaching union NAHT claimed nurseries in deprived areas might have to close if the changes go ahead, Nursery World reported.

General secretary Russell Hobby said: "We support the Government’s aim to offer more hours of free childcare to families that need that kind of extra help.

"We also applaud any focus on early years education as the best way to help children make a good start in life.

"However, the Government has ignored the fact that early years settings come in all shapes and sizes and some have legitimately higher costs than others."

A Department for Education spokesman said: "Our proposals for supplementary funding, which takes account of maintained nursery schools’ current funding rates, are for at least two years.

"This extra funding will provide stability for nursery schools, which make a valuable contribution to improving the lives of some of our most disadvantaged children.

"The funding is part of our record investment in early years – £6 billion per year by 2020.

"We will be consulting with the maintained nursery schools’ sector on future funding in due course."

When the consultation was launched Ms Greening said: "We are working with nurseries, preschools and childminders to support working parents with the costs of raising a family, doubling our free childcare offer to 30 hours for working parents of three- and four-year-olds.

"But to deliver on that commitment we know we must give every area of the country the funding it needs."

The proposed new formula is based on three factors, the Government said:

  • a ‘universal base rate’ of funding for each child, so that every local area is funded fairly for the core costs of delivering childcare
  • an ‘additional needs factor’, so that funding takes into account the extra costs of supporting children with additional needs to achieve good learning and development outcomes
  • the cost of providing childcare in different parts of the country