‘Austerity and underfunding’ pushes nursery chain into liquidation

Neil Puffett
Friday, November 29, 2019

A nursery chain that collapsed this week was facing financial pressure in part due to underfunding of 'free' government childcare.

Around 450 families have been left without childcare. Picture: Lucie Carlier
Around 450 families have been left without childcare. Picture: Lucie Carlier

Great Yarmouth Community Trust, which operates 10 nurseries across Norfolk and Suffolk, went into liquidation on Wednesday – affecting around 450 families and leaving more than 130 jobs at risk.

The trust’s accounts for the last financial year (2018/2019) have not been filed, but a report on finances for the previous year highlighted a number of areas of concern.

These included the risk of a reduction in public service contract income as a result of “continuing government austerity” and the fact that its current children’s centre contract came to an end in March 2019.

It also highlighted the concern that statutory funding for childcare was “not increasing in line with costs, particularly 30-hour funding”.

Norfolk County Council decided to close 38 of its 53 children's centres in January as part of a move away from using centres to directly provide services.

In May the charity Action for Children was awarded a £5.2m per year contract to run children's centres in Norfolk from October.

Norfolk County Council has said the sudden closure means there will be “insufficient childcare availability in Great Yarmouth over the next few weeks”. 

“We are working as quickly as possible to urgently increase the availability of childcare and early education in the area,” it said.

It has set up a webpage for families affected by the situation.

Neil Leitch, chief executive of the Early Years Alliance, said government underfunding of “free childcare” is having a huge impact on providers.

Research published earlier this month found that nearly a quarter of childcare providers predict they could close next year due to insurmountable financial pressures resulting from delivering the government's 30 hours funded childcare offer.

“Looking at the details of this story it’s hard to see how early years funding has not become a major election issue,” Leitch said.

“There’s no doubt that the scale of this closure is shocking and of course our first thoughts are with the staff and those associated with the nurseries – but, sadly, it’s been a long time coming.

“This hasn’t happened in a vacuum. We’ve warned and warned ministers about the impact underfunding is having on providers - and each of these warnings have been backed up by statistics: it’s a matter of record that fewer than half of parents accessing funded places get them genuinely 'free', and thousands of providers, particularly in poorer areas, are closing at an unprecedented rate.

“Instead of listening to us and taking action, we’ve had a raft of policies from all parties that will make these sort of closures even more likely. We simply can’t go on like this and it’s high time we had an honest conversation about the true cost of delivering childcare the real impact of ever more generous ‘free’ hours on both parents and providers.”