The Federation of Small Businesses (FSB) has written to families Minister Beverley Hughes, warning of a looming crisis in nursery care.
It says new regulations that prohibit nurseries from topping up inadequate government subsidies to cover the cost of free nursery places could put free care at risk.
"We are in danger of sleepwalking into a major crisis for nursery provision in th
is country," said South Yorkshire businessman and FSB regional chairman Tony Cherry.
"Compensation for free nursery places is already woefully inadequate, the Code of Practice is not working and nursery owners are beginning to suffer. We received a legal opinion advising that an impact assessment of the costs of the Code should take place.
"If the Government does not sort out this mess now, many families could find themselves unable to get the nursery care they need."
The FSB says it is not calling for more government money, but for the Code to be deferred until the funding formula has been evaluated."
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