The government's plan to double the amount of free childcare available has been underfunded by around £1bn, a think tank will argue today.
A report by the Institute for Public Policy Research (IPPR) says that increasing the amount of free childcare for three and four-year-olds to 30 hours a week would cost £1.6bn a year, £1bn more than estimated.
The government has only allocated an additional £365m for the first full year, 2017-18, rising to £670m in 2020-21, for the extended scheme, which is due to come into effect next September.
The IPPR pointed out that the Scottish government costed a similar proposal at £880m, with additional capital funding, and there is only a quarter of the number of eligible school-children in Scotland compared to England.
The report said that the additional burden of the new living wage, which is expected to hit the services and care sector especially hard, is likely to exacerbate the problems, and lead to some childcare providers raising fees, reducing services, or refusing to offer free hours.
Earlier this year, when Cameron first announced the plans, the Pre-school Learning Alliance, for private and voluntary childcare providers, and a number of other groups warned there was already a shortfall for the current scheme for providing 15 free hours of childcare a week, and they would not be able to cope with an increase.
Author of the Report, and IPPR senior research fellow, Giselle Cory, said: “When councils are already struggling to fund sufficient childcare provision on current hourly rates we know there is a problem: the £1 billion shortfall in delivering the extension will make a bad situation worse.
“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 IPPR has called on Osbourne to announce additional funding in his November spending review.