Question to the Department for Education:

To ask the Secretary of State for Education, with reference to paragraph 2.8 of the Spring Budget 2024, HC 560, whether trends in the level of (a) wage growth, (b) inflation and (c) National Living Wage rises were used to calculate the hourly rate paid to childcare providers to deliver free hours childcare for children aged nine months to four years.

The Spring Budget 2024 announcement confirms how the department will uplift costs in the 2025/26 and 2026/27 financial years. The department will use average earnings growth and National Living Wage (NLW) to forecast how staff costs are changing for providers and Consumer Price Index (a general measure of inflation) to forecast how non-staff costs will change. This is the same metric that was used at Spring Budget 2023 and as such, levels of inflation and the NLW were taken into account when calculating the funding rates paid by the department to local authorities for all of the entitlements in the financial year 2024/25.

The department’s methodology and the uplift to the rates are informed by data it receives from providers and parents to ensure it meets the pressures faced by the sector. The department regularly surveys a nationally representative sample of over 9,000 providers to gain insights into how they run their provision and the challenges they face. The department also regularly surveys over 6,000 parents to understand their usage of childcare.