“Sharp increase in nursery closures since introduction of 30 hours childcare”

By Gabriella Jozwiak

| 17 September 2018

A government-funded childcare scheme is to blame for a sharp increase in nursery closures over the past year, according to an early years representative body.

The National Day Nurseries Association (NDNA) has said nurseries that cancel their membership and close down are increasingly citing underfunding for the flagship government initiative as the cause.

Its records showed 73 settings closed their doors between September 2016 and August 2017. This number rose by 66 per cent to 121 from September 2017 to August 2018 after the scheme was introduced.

Under the government's 30 hours childcare initiative, around 330,000 three- and four-year-olds receive 30 hours of funded childcare a week.

The government provides an hourly funding rate to cover the costs, but NDNA observed that 71 per cent of nurseries that closed in the past year were in areas where the hourly rate was less than £5 an hour. In 44 per cent of cases, the nurseries received the lowest funding rate of £4.30 an hour.

The association said it observed clusters of closures specifically around London, Lancashire and the West Midlands. It said that, overall, the closures left about 5,000 children without an early years setting to attend.

NDNA chief executive Purnima Tanuku said the results suggested a clear link between closures and lower funding rates.

"Since this policy was announced, we have warned the government that providers would struggle unless funding was adequate," she said.

"Now we are seeing the impact of them undervaluing the quality childcare nurseries provide."

"Successive reports have shown that the funding rate is not covering providers' costs, particularly for private, voluntary and independent nurseries which provide the vast majority of funded places," she continued.

"If more of these nurseries fold or continue to limit places in order to survive, there won't be sufficient places for the childcare policy to work."

Tanuku also blamed other rising financial pressures on nurseries for the closures, such as increasing living and working wages rates and business rates.

Last week, research published by DfE found four in 10 early education providers had experienced a fall in profits due to the 30 hours scheme.

The Department for Education has been contacted for comment.