The Institute for Public Policy Research (IPPR) has predicted that plans to double free entitlement for three- and four-year-olds will cost £1.6bn in its first full year. This is in stark contrast to the government’s costing of the policy at £365m.

The funding gap calculated by IPPR comes just days after the Department for Education said it is “unable to understand” the true cost of delivering the free entitlement, despite more than 2,000 responses from the sector to the first stage of its review.

The think tank’s report states that the £1bn shortfall will “exacerbate existing problems in the childcare market” and calls on the government to set aside additional funding for the policy.

Senior research fellow at IPPR, Giselle Cory, said: “The government should be applauded for its commitment to additional free childcare hours, but the drastic underfunding of the policy calls into question whether it can be delivered without driving down quality and choice.

“At a time when parents desperately need high-quality care for their children, it is clear the current system is creaking at the seams even before it tries to cope with delivering extra free hours with less than a quarter of the cash we believe it requires.

“The government must prioritise properly funded childcare provision to meet demand, and ensure that standards do not fall.”

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