Return to funding on basis of attendance will force many more nurseries to close

Karen Faux
Thursday, December 24, 2020

As the Government is set to return to funding for the ‘free’ entitlements on the basis of attendance in January, more than half of local authorities say they expect to see permanent closures in their areas.

New research from charity the Coram Family and Childcare reveals that more than half of local authorities in England expect to see local childcare providers shut their doors for good when the Government’s current arrangements for funding the sector through Covid-19 end in January.

Last week the Government announced that funding for the spring term will instead be funded on the basis of the January 2021 census and local authorities ‘should return to the normal funding approach’.

Coram Family and Childcare’s research flags that a quarter of local authorities say they expect to see providers reduce the number of free early education entitlement places they offer. These places are shown to narrow the achievement gap between disadvantaged children and their peers.  

The charity warns that closures are likely to lead to greater shortages in childcare availability for families, in a system that was already under pressure pre-pandemic.

More than a third of local authorities report that the number of providers permanently closing in their local area has increased in the last year. 

There are also concerns about the availability of childcare for children with special educational needs and disabilities (SEND) and school-age children, with local authorities more likely to see a reduction in the number of places compared to demand in both these areas. Coram Family and Childcare’s annual Childcare Surveys, published prior to the pandemic, identify that there were already significant childcare shortages for these groups of children.  

Megan Jarvie, Head of Coram Family and Childcare, said: ‘The ending of additional Government support for childcare is going to be a blow for many childcare providers and the families who depend on them. We all rely on the childcare sector to support the learning and development of children and to enable parents to work.

‘There are already signs of the pressure on childcare providers – a third of local areas already report an increase in nursery closures and shortages are increasing in some areas. It is vital that the sector is supported so that every family can find the high quality childcare they need.’ 

Latest guidance

In its 17 December guidance on funding arrangements the Government has set out that where a local authority sees attendance below 85 per cent of the January 2020 census level, and if it can provide evidence for increased attendance in the spring term, it will provide a ‘top up’ limited to the equivalent of 85 per cent of the council's January 2020 census. 

This is designed to give local authorities ‘additional financial confidence to pay providers for increasing attendance later in the term’.

The new guidance from the DfE states: ‘The number of children attending childcare has been increasing across the autumn term and attendance is much higher than during the first national lockdown. Therefore, we will fund all local authorities on the basis of their January 2021 census for the spring term.’

The Treasury has announced an extension to the Job Retention Scheme that will allow employers to keep staff on furlough an extra month, until the end of April 2021.

The guidance for early years providers accessing the Coronavirus Job Retention Scheme has been updated to reflect the change in funding for providers.

This update comes shortly after the government released the results of its Survey of Childcare and Early Years Providers and Covid-19- Wave 2, which was carried out in between September and October 2020.

The survey revealed that just 42 per cent of nurseries and pre-schools and 51 per cent of childminders believed that it would be financially sustainable to continue to run their childcare provision for a year or more.

According to the survey, open nurseries and pre-schools were losing an average of more than £7,000 a month in private income while open childminders were losing an average of £700 a month in private income.

Read Coram Family and Childcare’s briefing ahead of the publication of its annual Childcare Survey 2021, due next Februaryhere

Read the Government’s latest guidance on funding here

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