Early years leaders warn of closures after government scales back energy bills scheme
Joe Lepper
Wednesday, January 11, 2023
Early years sector leaders have warned that the number of nurseries forced to close due to the cost-of-living crisis will escalate after ministers announced a significant scaling back of support to pay rising energy bills.
The government has announced that its current six month £18bn package of support through the energy bills discount scheme for non-domestic customers, including nurseries, will be replaced from April with a scaled down £5.5bn scheme.
This reduced scheme will be available until March 2024, exchequer secretary to the Treasury James Cartlidge confirmed in parliament earlier this week.
"Today I can confirm a new Energy Bill Discount Scheme for businesses, charities & the public sector.”
— HM Treasury (@hmtreasury) January 9, 2023
Exchequer Secretary to the Treasury @jcartlidgemp sets out the new 12 month energy scheme, providing support in the face of high energy prices. pic.twitter.com/4llQoORVEg
While a “higher level of support” is available to energy intensive sectors, this has been restricted to manufacturing businesses, according to the government.
The Treasury says the new scheme “strikes a balance between supporting businesses over the next 12 months and limiting taxpayers’ exposure to volatile markets”.
However, early years leaders fear the reduced support will force more nurseries to close their doors.
National Day Nurseries Association chief executive Purnima Tanuku warns that unless nurseries are offered more support “settings will close, and parents and children will pay the price”.
She says that if no more help is available through the energy bills scheme, government must look at other ways to support settings, such as through business rates relief.
“For early years settings, who are already closing at an alarming rate, this could be disastrous," she said after the government announced details of the new scheme.
“Early years settings like nurseries provide a warm and nurturing environment as well as hot meals for our youngest children. With government funding increases well below inflation and rising costs they are facing serious, real-terms cuts. These providers are being put between a rock and a hard place with the only options being raising fees to parents or closing their doors.”
Early Years Alliance chief executive Neil Leitch said it was “incredibly concerning” that the government has scaled back support to nurseries and other businesses and charities to pay their energy bills.
“While the continuation of some energy support is better than nothing, the harsh reality is that the level of support announced is unlikely to do much, if anything, to improve the current situation, especially given that the rising cost of energy is only one of a myriad of challenges affecting early years settings.
“With providers also facing severe staffing shortages, record increases in the national minimum wage and wider inflationary pressures, it is clear that urgent action is needed to prevent the collapse of our vital sector.
“As such, it is absolutely vital that the government commits to the investment and financial support needed to safeguard the future of the early years. Ministers have dragged their feet for long enough.”
"While the continuation of some energy support is better than nothing, the harsh reality is that the level announced is unlikely to do much, if anything, to improve the current situation"
— Early Years Alliance (@EYAlliance) January 10, 2023
See our comment on the reduced energy support for businesses 👇https://t.co/mN0R0GSbi7 pic.twitter.com/d99C1wFbS8
Leitch is also concerned at a lack of support for home-based businesses, such as childminders.
He said they are already taking “extreme action” including “not heating their ow homes in the evenings and weekends to ensure that children attending their settings can remain warm during the week”.
“All too often, childminders are left at the bottom of the pile when it comes to government policy. We urge the government to ensure that these vital businesses are able to access the energy support they so desperately need,” he added.
Compared with pre-pandemic levels, 8,800 childminders and 500 nurseries have closed, according to Ofsted figures released last year.
Chancellor of the Exchequer Jeremy Hunt said that while wholesale energy prices are falling he is concerned this “is not being passed on to businesses” by energy suppliers and has “written to Ofgem asking for an update on whether further action is needed to make sure the market is working for businesses”.
He added: “My top priority is tackling the rising cost of living – something that both families and businesses are struggling with. That means taking difficult decisions to bring down inflation while giving as much support to families and business as we are able.”
Meanwhile, Harvey Sinclair, chief Executive of eEnergy, warned the government that more support is needed to help schools cut millions of pounds in wasted energy so that the sector is protected ahead of next winter.
In December, the Department for Education pledged £500 million to schools for energy efficiency upgrades, helping to save on bills during the winter months and manage energy consumption.
Sinclair said this was a “welcome first step,” but was announced too late to protect the education sector this winter.
He added: “Every year, public sector organisations collectively lose hundreds of millions of pounds in energy waste – due to a combination of old, inefficient infrastructure and outdated measurement practices.
“The energy support scheme has saved jobs and kept schools open this winter. Likewise, funds to support energy efficiency were a welcome first step. But if we’re going to protect it next winter too, the sector needs sustained support and action to overhaul the way schools and colleges purchase and use energy.”
