Nurseries face 'mass closure' due to financial impact of Covid-19

A report by the Early Years Alliance (EYA) says that parents could soon struggle to find childcare places as pre-schools, childminders and nurseries face huge financial losses.

New data modelling, commissioned by early years analysts Ceeda, shows settings are facing huge financial losses as a result of government underfunding and reduced capacity due to the pandemic.

• Blog: Late night guidance suggests row back on furlough for childcare

• News: Low demand for childcare puts sector's future at risk as lockdown lifts

Settings were forced to close on 23 March to all but vulnerable children and those of key workers as the government enforced lockdown measures.

They were able to reopen with social distancing measures in place from 1 June but Ceeda figures show that most providers in England were operating at 37 per cent capacity during the week of 8 June compared with 77 per cent in the same week last year.

If the take-up of childcare places continued at this level on average over the next 12 months, providers could face losses of:

• £3.63 per funded two-year-old child per hour (a funding shortfall of 68%)
  

• £2.53 per funded three- and four-year-old child per hour (a funding shortfall of 55%)

The Forgotten Sector, a report published by the alliance accompanying the figures, highlights significant challenges faced by the sector during lockdown.

It details areas in which the early years has been overlooked during the pandemic including a government U-turn on providers use of the furlough scheme and a last-minute omission of the sector in the government’s £1bn catch up plan for schools.

The EYA is calling on the government to: 

• extend financial support provided to schools to early years settings to cover costs such as extra cleaning
  

• extend businesses grants currently available to retail, hospital and leisure businesses to childcare providers

• extend the £1bn ‘Covid-19’ catch-up fund for schools to the early years sector, as was initially announced

Neil Leitch, chief executive of the EYA, said: “Even in areas where parental demand for childcare places remains high, providers are currently restricted on how many children they are able to care for under government guidance, which is going to place even more financial pressure on them over the coming months. 

“The fact is that the early years sector is at a crunch point, and unless urgent action is taken, we are going to see many more settings forced to close their doors over the coming months. This could mean chaos for parents – and particularly mothers – trying to access childcare in order to return to work at a time when the government is desperately trying to restart the economy.”

Jo Verrill, managing director of Ceeda, said: “The coronavirus pandemic has delivered a powerful reminder of the importance of early education and childcare in all its facets, from the base need to keep vulnerable children safe from immediate harm, to giving every child and adult the opportunity to reach their full potential in education and work. 

“There is much rhetoric on the importance of a child’s early years. Now more than ever, this must be matched by investment, if we are to protect the country’s vital early years infrastructure.”

The report comes following the release of new Ofsted figures shows a significant drop in the number of childminders operating in March compared with December 2019.

As of 31 March, there were 37,000 providers operating, down by 600 since 31 December 2019.

Tulip Siddiq, Labour’s shadow minister for children and early years, said: “A decade of underfunding has hit childcare providers hard, and hundreds were being forced to close every month even before this crisis.

“Many of the nurseries and childminders which have managed to survive now face an existential threat from Covid-19. It is too awful to contemplate the impact on working families and the life chances of our children if more childcare businesses are allowed to go under.

“It’s time the government recognised the importance of childcare and early education in our economic recovery, and came forward with a proper plan to save the early years sector.”