Some kids -especially boys according to ds' school - are just not developmentally ready to read until they are 6.
I knew ds was not blending all the way through P1 (Reception) - he was just learning the books off by heart - but the school said not to worry. At the beginning of P2 (Y1) they give him 6 weeks intensive 1:1 sessions with the depute head, before discussing and agreeing with us that it would be best for his confidence to drop him to the middle group.
He finally "got" reading towards the end of P2, when he would have been 6 and 3/4.
He stayed in the middle group until the end of P4, even though for a year he was sort of "between" for nearly a year, before moving back up to the top group.
He is now 11 (nearly 12), about to start secondary school, a confident reader who was amongst the strongest readers in the top group in his last year at primary school, but, even more importantly free reads for enjoyment :) He is currently reading "The Hunger Games".
Raise your concerns with the school, ask them what you can do to help in the process (like LadySybill says, it is a 50:50 partnership) and stop angsting The best bit of advice we were given by the school was to make reading fun and not pressure him. They said to find something that interested him and he'll realise that reading can be useful. In his case, it was the sports pages, so that he could see if his football team had won, Doctor Who magazines and Captain Underpants books 