Councils are calling for more power to build nursery capacity after nine in 10 said they feared closures of settings will put government childcare expansion plans at risk.
The call follows the recent publication of research by the Local Government Association (LGA) which shows that four in 10 councils said they saw more settings close last autumn (see in numbers) and that disadvantaged families were disproportionately affected by this.
The study raises doubts about whether £204m of extra funding for councils – announced in July to deliver the rollout of 15 hours of funded childcare to all two-year-olds from April 2024 and of 30 hours for all children aged nine months and above from 2025 – will be enough to prevent the situation from worsening.
‘Too little, too late’
The LGA report, Nursery Closures: Research on the nature, impact and drivers of nursery closures in England, states: “Sector bodies fear that the increase will be too little, too late, and if the rate does not fully cover delivery costs, the expansion could lead to further closures by encroaching on the space for settings to cross-subsidise through charges to parents for provision outside funded entitlements, as many currently do, and this is set to worsen as the expansion increases demand for funded places.”
Nearly nine in 10 councils were concerned that closures in 2023 will be significant and undermine sufficiency, with sector leaders warning this will further embed the attainment gap.
In addition to government underfunding, other factors fuelling closures include ongoing problems with staff recruitment and retention, the impact of the pandemic and cost-of-living crisis, and the inability to charge parents extra for things like food and nappies in disadvantaged areas.
The report continues: “Both our survey and Ofsted data highlight the striking variation across local areas – with a notable minority seeing very significant effects from closures.”
In one city featured in the report, there were to be no funded places for two-year-olds available for another nine months at the time the relevant council was surveyed. The report adds that 45 per cent of local authorities said lower income families had been most affected and 40 per cent flagged areas of high deprivation. In these areas, any drop in nursery places is likely to have more impact because there is already a poorer supply and further travel has cost implications, the report explains. It adds: “Both of these factors restrict the options available to lower income families more significantly, and especially those in rural communities without independent means of transport.
“For families with children with developmental issues or more complex needs (also more likely to be lower income), the upheaval from changing setting can be more of a concern and finding a suitable alternative harder, especially as more settings say they lack capacity to support children with additional needs.”
Megan Jarvie, head of family and childcare at charity Coram, says that for some families “any kind of charge can mean they’re not able to take up a place”.
Councils highlight ways they have intervened on behalf of vulnerable children, such as by encouraging schools to provide additional places or children’s centres to offer extra sessions, but, according to the report, it is often not possible, especially with the “increasingly abrupt nature of closures”.
Local authorities will inevitably play a greater role in the early years market when the changes take effect – from funding half of all places to around 80 per cent.
“It makes them by far the biggest buyer in the market,” observes Jarvie. Coram’s own sector survey earlier this year found that just half of local areas have enough childcare for children under two as it stands.
Jarvie agrees with the LGA’s framing of the expansion as an opportunity to become “more influential market managers and commissioners”.
“We’d support strengthening of commissioning,” she says. “Local government tends to have a better picture of demand and supply in their area, so can commission childcare that meets that need.
“We’d want to see them being able to make demands of providers based on what local needs are and the expansion gives them the power to do that.”
Other recommendations from the LGA include strengthened support for providers, such as bespoke financial advice for small providers and harnessing support from schools and family hubs, better outreach to families affected by closures, and partnership development of local early years workforce strategies.
It also suggests more thorough local assessments of sufficiency and even powers to withhold funding in areas where there are enough places to direct resources to areas of greater need, as well as improved scope for varying funding between providers.
Umbrella body the Early Years Alliance, which also operates nurseries almost exclusively in areas of deprivation, has seen its number of settings drop from 132 to 42 in four years.
Chief executive Neil Leitch believes that councils directing extra funding towards such areas would have helped.
“There is no question that it would have eased our burden and we’d have had more settings open,” says Leitch.
“In areas where we have closed [settings], these families will become more marginalised.”
He welcomes the proposed drive to improve sufficiency data and highlights the alliance’s Freedom of Information investigation that revealed councils’ shortcomings in this area. “If you haven’t got the intelligence then you can’t make informed decisions,” he adds.
For example, the alliance found that just 14 per cent of councils collect data on the proportion of parents and carers in the area that can access early years provision at specific times and dates they want.
Other early years experts say councils could do more to align how they measure and manage sufficiency in their area (see expert view).
Understanding closures
Jonathan Broadbery, the National Day Nurseries Association’s (NDNA) director of policy and communications, is concerned about councils’ market-shaping proposals.
“If a provider wants to set up an outstanding nursery in an area already served by good ones, they should be able to,” says Broadbery.
“It may look like an encouragement to benefit deprived areas, but we’d be worried about the unintended consequences for parental choice.
“We would rather they look at improving existing provision and understanding of why settings are closing, rather than restricting business.”
On boosting funding rates for deprived areas, Broadbery says: “It can be very helpful, but there is still an element of taking from one pot to support another.”
Both the NDNA and research organisation the Education Policy Institute suggest that bringing the Early Years Pupil Premium – currently £342 per child per year – in line with the primary school rate – currently £1,455 – would have more impact on boosting provision in disadvantaged areas.
Tammy Campbell, the institute’s director for early years, says: “Children from low-income families are among those most likely to benefit from good-quality early education and care – so policy and funding should work in a way that prioritises provision for these children.”
In numbers
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17% fall in childcare providers between March 2019 and August 2022
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45% of councils said disadvantaged families most impacted by closures
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40% of councils said closures increased in autumn 2022 compared to 2021
Source: Ofsted registrations; Nursery closures research, LGA, July 2022
MANAGING THE MARKET
ADVICE FOR LOCAL AUTHORITIES AND PROVIDERS
By James Hempsall, director of early years consultancy Hempsall’s
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Measuring and managing sufficiency is complex, involving diverse delivery models, individualised patterns of attendance, funding criteria, and different dynamics of disadvantaged and more affluent families. Councils could do more to bring these two functions together, or at least align them. They are not the same, but they can complement each other.
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Nurseries are telling me they are restricting their offers due to all these factors, which has the capacity to mask the day-to-day realities and availability of sufficient supply. I am sure actual places being offered and used fall short of the official Ofsted registration numbers.
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Every nursery should be reviewing their business models now, for the next 12 months, based on what we know the funding rates are, and preparing the ground for what is coming over the next two years. Some of the new funding appears much closer to what the market needs than perhaps that for three- and four-year-olds. The market will be significantly influenced by the new entitlements, and this will have significant impacts across all settings.
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All authorities should have three childcare market management strategies. One overall plan for the whole area; a second for the working families market; and a third for disadvantaged families and areas. All informed by effective sufficiency assessments. This is a three-fold objective: high-quality early education for all pre-school children; childcare when children and families need it; and tackling inequalities and disadvantage.
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As well as closures, we have mergers and acquisitions – and they are booming. There are some winners here, and some signs that federating and building economies of scale are working in some aspects of the sector. Authorities could do more to bring nursery providers together, to collaborate and co-operate, to share and retain resources – including management, staff, volunteers and apprentices, and to benefit from non-competitive business planning and business skills networks, creating informal nursery groups if you like.
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The government would do well to look at how the essential function of council early years and childcare teams could be better resourced, supported and enabled.
