A quarter of childcare providers could close within a year

Historic underfunding and lack of government support during the coronavirus crisis have placed the sector on the ‘brink of collapse’, says new research published today.

Losing a quarter of childcare providers would have a 'devastating impact' on working families.
Losing a quarter of childcare providers would have a 'devastating impact' on working families.

An online survey of more than 3,000 nurseries, pre-schools and childminders carried out by the Early Years Alliance highlights that 25 per cent of respondents felt that it was 'somewhat unlikely' or 'very unlikely' that they would be operating in 12 months' time.

Seventy four per cent laid the blame firmly at the Government’s door, saying that it hasn’t provided enough support for early years providers during the coronavirus crisis.

The Alliance said that a key area of concern for childcare providers was the recent Government U-turn on furlough support that childcare providers can access through the Coronavirus Job Retention Scheme (CJRS).

When asked what impact the new limitations on furlough funding would have, just under half said they may need to make staff redundant. In addition:

  • 37 per cent said they may need to retract offers to top up staff wages to 100 per cent
  • 21 per cent said they may need to retract offers to waive or reduce parent fees

Tulip Siddiq MP, Labour’s shadow minister for children and early years, said, 'The childcare sector is on the brink of collapse. This survey is further evidence that the Government’s lack of support is forcing nurseries and other providers to close and sack staff.

'Losing a quarter of our childcare providers in this crisis would have a devastating impact on working families. Ministers need to wake up to the reality that many vital early years providers will be lost forever unless they step in to save our childcare.'

'Untold damage in the long term'
Government guidance published on 24 March stated that childcare settings could benefit from both early years entitlement funding and the CJRS. However, on 17 April, the Department for Education published new guidance, which placed limits on how much financial support providers receiving early entitlement funding could receive via the scheme.

The Alliance’s survey found that, of those childcare providers who employ staff, 75 per cent had thought they would be able to access the scheme in full alongside early entitlement funding, prior to the new guidance being published.

A similar proportion (71 per cent) had already furloughed staff ahead of the new guidance, while a further 11 per cent had informed staff they were going to be furloughed. 

The DfE has claimed the last-minute guidance was simply ‘further clarity’ on the support that early years providers can access via the two schemes.

Other key concerns highlighted by the survey included: 

  • Childcare settings who are unable to benefit from the Government’s £10,000 Small Business Grant because they rent their premises or are based in premises that don’t attract rate relief, or because their premises have a rateable value of more than £15,000 
  • Childminders unable to receive any financial support from the Self-employed Income Support Scheme until June.
  • Childminders who have operating for less than a year, and therefore cannot benefit from the Self-employed Income Support Scheme at all.

The survey ran from 22 - 29 April and received 3,167 responses. 

Commenting, Neil Leitch, chief executive of the Alliance, said: ‘The recent last-minute U-turn on the support that childcare settings can receive for furloughed staff in particular has had a hugely negative impact on the sector, and if not reversed, is likely to contribute to many avoidable redundancies and, in some cases, permanent closures.

‘Add to this the number of providers that the survey revealed are falling through the gaps of existing schemes – such as settings unable to benefit from business support grants, and newly-registered childminders excluded from the Self-employed Income Support Scheme – and it’s clear that government support for the sector is severely lacking.

‘Like schools, early years settings are an essential part of our social infrastructure, and will play a vital role in supporting parents to be able to return to work as the current lockdown situation is eased. We know that these have been an expensive few months for the Treasury, and that ministers may not see the value of committing to greater financial support for a sector that they have long overlooked and undervalued, but the reality is that abandoning the early years sector at this critical time will cause untold damage to this country’s economy in the long term.

‘The Government must now accept that it needs to do much more to support early years providers in this country – otherwise, we may not have a functional childcare sector when this crisis is, eventually, over.’


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