Analysis by the National Day Nurseries Association (NDNA) shows that 121 nurseries closed between September 2017 and the end of August 2018, compared with 73 closures in the previous 12 months.
This represents a 66 per cent increase in the number of nurseries shutting their doors.
The figures have been drawn from NDNA’s membership cancellations. They do not include closures of other childcare providers such as childminders. As such, it says the number of settings that have closed since last year could be much higher.
Of the nurseries that have closed since the 30 hours policy was introduced last September, 71 per cent received an hourly funding rate of less than £5 per child, per hour. A total of 44 per cent received the lowest funding rate of £4.30 per child, per hour.
This confirms what we have known all along. That the government has made a grave mistake with its 30 hours policy. The introduction of the 30 hours “free” childcare has resulted in settings being put under even more financial pressure than they already were.
Closures have increased by 66% in the first year, equating to 121 nurseries going out of business. This is completely unsustainable and is the very opposite effect that was originally intended by doubling the 15 funded hours. There is no way that the early years childcare industry can withstand this increase in settings closures – what is the point of short term gain for parents when the reality is that in the long term the very same parents will suffer as there will be no nurseries at all!
What other industry could possibly sustain this? There is a fundamental reason why the 30 hours funded childcare doesn’t work - a universal rate cannot work for everyone. Costs and charges differ per county, per city, per town and of course, per setting.
Few settings are covering their costs and inevitably, they are being set up to fail. The reason childcare is so expensive in this country is not because childcare providers are greedy, it’s because the providers are forced to supplement the non-funded hours in order to break even (in a very few cases, make money) across the non-funded hours.
I’ve always supported the position that Champagne Nurseries on Lemonade Funding (CNLF) takes which is that the 30 hours funded should be made a subsidy. The government blindly committed to 30 hours free childcare and it cannot possibly deliver that, it simply does not have the money. So our argument is and always has been that the funding should be used as a subsidy against nursery fees.
Allan Presland, author of “Improving the Business of Childcare” and CEO of Parenta, the UK’s largest provider of business support solutions and training for the early years sector works with around 6500 childcare providers around the world.