Alternatives to phonics / sight reading

[Reluctantadult]

Has anyone got any experience of alternatives to phonics? My ds age 5 in Yr 1 is a real sight reader. He's actually ahead on reading I would say, but doesn't decode and segment the words as he goes. School are keeping him on easier books and say not using phonics might hold him back later. He does know the digraphs etc he just reads by sight. I can't see why this is a bad thing?! School suggested it might hinder him later.

I'm more confused as to why the teacher told me sight reading might be an issue later on! Rather than bothered about the book level. Although that does annoy me too because we have to read them together 3 times before they'll swap the book 😂

Sight reading is a problem if children are just memorising words, as they then aren't internalising spelling rules and will struggle when books get harder and they coming across new or made-up words (eg trying to read Roald Dahl or Harry Potter books - they'd have no chance with Snozzwanger or Quidditch).
But your son isn't memorising words - he's silently decoding in his head which is completely different.