Gone by Christmas? One in six early years settings could close if their income doesn’t increase, new survey reveals

Kathy Oxtoby
Friday, October 30, 2020

Gone by Christmas? One in six early years settings could close if their income doesn’t increase, new survey reveals.

Most providers are facing a funding shortfall.
Most providers are facing a funding shortfall.

One in six early years settings in England say that they could close by Christmas if their income doesn’t increase, rising to one in four in the most deprived local authorities, according to survey findings announced today by the Early Years Alliance. 

The survey of more than 2,000 nurseries, pre-schools and childminders carried out in early October on the ongoing impact of Covid-19, also revealed that only a quarter of providers expect to make any profit between now and March.

Just over half of providers said they would need emergency funding to stay open over the next six months, and two-thirds said that the Government hasn’t provided enough support for the early years sector during the Covid-19 pandemic. 

Possible mass childcare closures
The combined effect of continued low demand for places and patchy government support could lead to mass childcare closures, with the most deprived areas in England set to be the worst hit, the early years membership organisation found. 

The Alliance is calling on the Chancellor to commit to a £240 million Early Years Sufficiency Fund targeted at those childcare providers at risk of closure at the upcoming Spending Review to ensure that there are enough early years places to meet families' needs.

This recommendation is in addition to the Alliance's ongoing call on government to commit to reviewing and revising early years funding levels annually to ensure that funding rates reflect rising provider costs, particularly increases in the national living and minimum wages, in the long term.

Early years providers across the country have been hit hard by a sustained fall in parental demand for childcare, with survey respondents reporting, on average, a 21 per cent fall in occupancy levels compared to this time last year, despite being allowed to open to non-key worker/vulnerable children since June. 

The Government has said it was supporting the sector by ‘bulk buying’ early years places until the end of the year by funding councils based on last year’s childcare attendance figures.

However, the Alliance said its Freedom of Information request investigation carried out in September found that in many cases, ‘this money was not reaching the frontline’, with one in six local authorities in England admitting that they were not adhering to government guidance on funding childcare providers based on last year’s numbers. 

In addition, the survey found that government funding rates for the early entitlement offers are currently less than the cost of delivering places for 60 per cent of providers offering two-year-old places, and 80 per cent of those providing three and four-year-old places. This means that even those early years providers being correctly funded based on latest year’s attendance figures ‘are still likely to be facing a funding shortfall’, the Alliance said. 

The continuation of early entitlement funding also provides ‘little support’ for providers who deliver a low number of funded places, the Alliance said. For around four in ten (38 per cent) survey respondents, funded places account for less than half of overall childcare places offered, with seven per cent offering none at all – meaning they are solely reliant on private parental fees.

Neil Leitch, chief executive of the Early Years Alliance, said it was a critical moment’ for the early years sector. ‘With demand for places still significantly below what would typically be expected, and no sign of things returning to normal any time soon, many nurseries, pre-schools and childminders are reaching the point of no return. 

‘Worse still, our survey shows that it is those early years settings providing vital care and education to families in the most deprived areas – who are already bearing the brunt of the impact of the pandemic – that are most at risk.’ 

Mr Leitch said there was ‘absolutely no excuse for the Government’s continued indifference towards the early years sector’.

‘It argues that safeguarding the economy is critical to the country’s recovery, but chooses to ignore the fact that there can be no recovery without a functioning early years sector providing the quality care that parents and families need.’  

He added that it was ‘not too late for the Government to show that it recognises the value of the sector – both to the young children who benefit from quality early education, and the parents, and particularly mothers, who benefit from accessible care – and make the investment needed to safeguard the many thousands of providers in desperate need of support’.  

Ann Ross, a former childminder based in Dartford, who has worked in childcare for 27 years said the Covid pandemic had ‘totally decimated and wiped out my business’.

‘I went from being full with no expected vacancies available till September 2021, to having no children on roll.  

‘Sadly, with no income and very little help and no business forthcoming, I have had to look elsewhere for work.’

 Sharon Brayer, manager of Busy Bees, based in New Milton, Hampshire, said:‘Busy Bees has been running for 28 years and we do not know how much longer we will be open.

‘Poor funding is the main reason, and adding Covid into the mix has left us with serious financial difficulties.’

Responding to the survey, Tulip Siddiq MP, Labour’s Shadow Minister for Children and Early Years, said: ‘Urgent action is needed by the Government to save the nurseries and childminders that working parents and children rely on. It is now or never to save the childcare sector, and it has to be now for the sake of our economy.’




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