Nursery workers' pay 'may have to fall to cover free childcare scheme'
The New Economics Foundation think tank found nurseries would have to pay staff £7.33 an hour - below the minimum wage - to break even without passing on costs for the plan.
It would mean a pay cut for 62% of the least qualified staff, and one of 85% for those with at least A-level qualifications.
Under the Government's plans, all three and four-year-olds in England will be entitled to 30 free hours of childcare a week from this month, up from 15 hours.
On average, parents are charged £6 per hour for under twos, £5.30 for two-year-olds and £5.10 for three and four-year-olds - but under the plans the Government is offering £4.27 per hour for the same care.
The think tank said nurseries would look at making savings elsewhere, by cutting services or charging more for other extras such as foods, nappies and activities - leaving parents to fill the funding gap.
Lucie Stephens, of the New Economics Foundation, said: "It's right that the Government is looking at ways to deal with the crippling cost of childcare for parents. But they have to put their money where their mouth is.
"This research shows that the whole system for funding childcare in this country doesn't really work. Nurseries will either pass on the extra cost to parents, cut services or squeeze their workers' wages. None of that is good news.
"We need to support new and better ways of doing childcare. When parents have real control over the design and delivery of the care their children receive, it becomes more affordable and more suitable for their needs.
"At the New Economics Foundation we are working with parents to develop new models of childcare, which combine decent pay and conditions for staff with real control and affordability for parents."