Nurseries are listed alongside wedding planners and companies offering holiday accommodation as areas of “particular concern” by the Competition and Markets Authority (CMA).
The probe comes after the CMA said it has recorded a rise in customer complaints about cancellations and refunds in the three sectors, which it said it would now investigate. The probe will later be extended to cover more areas of concern, the CMA said, warning that organisations found at fault over refusals to give refunds to customers could face legal action.
However, early years leaders have said this latest issue to hit childcare providers leaves the sector “between a rock and a hard place”.
Purnima Tanuku, chief executive of NDNA, said: “Nurseries are being asked to remain open and run at a loss to provide emergency childcare, while those who can’t open still face staffing and other costs which the government's support doesn’t fully cover.
“Nurseries as consumers have their own concerns, especially about how insurance cover is working for them as this is leaving them exposed to losses. We have also raised concerns with the CMA previously about how government funding is affecting the childcare market which is already pushing them to the brink. Before this crisis more than half were only breaking even or running at a loss.
“If nurseries don’t have the income to cover their ongoing costs then they won’t be able to re-open when parents go back to work. If these measures – combined with a lack of government support – force more nursery closures it will be the families and children who will suffer in the long term.”
Neil Leitch, chief executive of the Early Years Alliance, added: “The government has asked that childcare providers are 'reasonable and balanced in their dealings with parents' during the coronavirus outbreak, and we are proud to see that this has been the approach taken by the vast majority of nurseries, pre-schools and childminders to date. We know that many early years providers are waiving parent fees during this crisis regardless of the terms of their parental contracts, and despite the negative financial impact this is likely to have on their settings.
“Any instances of settings taking an unreasonable approach to parental fees would be likely to represent a tiny minority of the sector as a whole. What's more, it is important that the CMA takes into account the fact that, unlike the holiday and wedding industries, the childcare sector is heavily dependent on government funding, and this funding has been inadequate for years. This has put a huge pressure on providers trying to remain sustainable, and especially during this incredibly challenging period.”
The CMA announcement comes weeks after sector leaders criticised the government over a “U-turn” on rules covering furlough funding for settings, warning the changes could leave the sector “in jeopardy”.
Organisations have now joined forces to write to children’s minister Vicky Ford and Chancellor Rishi Sunak in a bid to “ensure that the childcare and early years sector is not further put at risk through a lack of government support”.
The National Day Nurseries Association (NDNA), Professional Association for Childcare and Early Years (Pacey), Early Years Alliance and Early Education lay out proposals for the government to support the sector as lockdown measures are lifted, highlighting childcare is “vital” for parents returning to work.
It also adds that 10 per cent of providers have already been forced to close settings permanently due to a lack of funding, with a further 30 per cent “uncertain about their future”.
The group has called on Ford and Sunak to meet urgently with early years leaders to discuss increased support for the sector.
