Childcare sector on 'brink of collapse' as quarter of providers fear closure

The Early Years Alliance (EYA) polled more than 3,000 nurseries, childminders and pre-schools in England.

It found that 25 per cent think it is “likely” that they will be permanently closed within the next 12 months.

A further 74 per cent criticised the government for not providing enough support for the sector, the survey shows.

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It also found that nearly half of childcare settings with staff (47 per cent) may have to make some redundant due to a government U-turn on the ability of providers to access to the Coronavirus Job Retention Scheme (CJRS).

The findings are the latest is a series of blows to hit the sector since nurseries were ordered to close to all children but those of key workers and those classed as vulnerable on 23 March.

Last month, providers and sector leaders slammed the government after it announced that settings providing government-funded childcare places would not be eligible to furlough staff as part of the CJRS.

Many said ministers had “rowed back” on plans to support the sector through both schemes. It was later announced that local authorities could switch funding for government-funded childcare places between settings, leading to fears that settings that had closed completely would miss out on vital support.

Nurseries were dealt another blow when the Competition and Markets Authority (CMA) announced they would be investigated - alongside wedding planners and holiday accommodation providers - over a rise in customer complaints about cancellations and refunds.

In addition, sector leaders have raised concerns over a lack of support for new childminders after a separate survey showed at least one in five is not eligible for government support.

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According to the Professional Association for Childcare and Early Years (Pacey), 21 per cent of 5,000 childminders polled made under £5,000 profit over the last year, meaning they are likely to receive just £83-a-week under the current government scheme.

A further 18 per cent of respondents started their businesses within the last three years, meaning they will not qualify for any help.

Neil Leitch, EYA chief executive, said the findings “paint a truly worrying picture of a sector struggling to cope with the impact of the coronavirus outbreak”.

“Many nurseries, pre-schools and childminders were already struggling financially long before the coronavirus outbreak hit as a result of years of severe underfunding – and while the government has taken some steps to support providers during this period, as the results of the survey show, they are simply not enough.

“The recent last-minute U-turn on the support that childcare settings can receive for furloughed staff in particular has had a hugely negative impact on the sector, and if not reversed, is likely to contribute to many avoidable redundancies and, in some cases, permanent closures,” said Leitch.

“Like schools, early years settings are an essential part of our social infrastructure, and will play a vital role in supporting parents to be able to return to work as the current lockdown situation is eased. We know that these have been an expensive few months for the Treasury, and that ministers may not see the value of committing to greater financial support for a sector that they have long overlooked and undervalued, but the reality is that abandoning the early years sector at this critical time will cause untold damage to this country’s economy in the long term.

“The government must now accept that it needs to do much more to support early years providers in this country – otherwise, we may not have a functional childcare sector when this crisis is, eventually, over,” he added.

Councillor Judith Blake, chair of the Local Government Association’s children and young people board, said: “Councils are extremely concerned about the financial viability of early years providers, many of whom are operating at a loss in order to provide vital childcare for our critical workers and most vulnerable children.

“The government needs to provide additional funding to make sure that no provider loses out financially for staying open, and to make sure we have all of the childcare places we need going forward to make sure people can get back to work when the time comes.”

Shadow early years minister, Tulip Siddiq, said: “The childcare sector is on the brink of collapse. This survey is further evidence that the government’s lack of support is forcing nurseries and other providers to close and sack staff.

“Losing a quarter of our childcare providers in this crisis would have a devastating impact on working families. Ministers need to wake up to the reality that many vital early years providers will be lost forever unless they step in to save our childcare.”