Campaigners claim nurseries are facing the “final straw” after Tory ministers slipped out a “negligible” 8p-an-hour rise just days before the election.
Funding for nurseries providing 30 free hours a week of free childcare will rise from £4.30 per child to £4.38 in April 2020 – under 2%.
In a statement slipped out just before the Commons broke up, Schools minister Nick Gibb said it would mean spending £3.6bn to support nurseries and childminders in England.
He said it would “deliver high quality care and education” and came on top of funds from Chancellor Sajid Javid at the Spending Round in September.
But nurseries that have long complained about the low rates branded the rise a drop in the ocean.
Neil Leitch, chief executive of the Early Years Alliance, branded the rise “negligible” and “a few pennies”.
He added: “These providers are facing huge increases in business costs every year: rises in the national living and minimum wages, mortgages and rents, business rates, utilities costs.
“Worst still is the news that those areas that have seen funding fall over recent years will now see their rates frozen rather than increase.
“For providers in these areas already fighting for survival, this could well be the final straw.”
It is a key Tory policy to give working parents in England 30 hours a week of free childcare for kids aged three and four – with an offer for some aged two.
Each parent must work at least 16 hours a week to qualify. Labour has vowed to extend the offer to all two, three and four-year-olds with no means testing at all.
The level of funding for the scheme has led to claims it was being starved of cash by the government.
Last year the Commons Treasury Committee warned the shortfall in funds was hitting the quality of service and meant poorer parents risk losing out in favour of richer ones.
Some providers hiked charges for children who were not eligible for the scheme, such as under-threes, MPs said.
Meanwhile parents were being asked to pay for things that were previously free, such as food and activities.
It was not the only piece of news slipped out today just before the Commons dissolved for an election.
Housing minister Esther McVey joined a brigade of written statements, pledging to pass a law to ensure that “apart from in exceptional circumstances”, new homes will be sold as freeholds not leaseholds.
Ground rents will also be cut to zero on new leases and there will be fixed time frames and maximum fees for the provision of information.
But she admitted “we will implement these changes when Parliamentary time allows” – meaning there’s no set date.
It comes despite long calls for the government to act over the scandal of soaring ground rents for people trapped in leasehold homes.
Back in March MPs on the Commons Housing Committee called for “urgent reform” from the government.