GOVERNMENT PLANS TO CUT FUNDING TO CHILDCARE SECTOR ON BRINK OF ITS COLLAPSE

1 in 4 nurseries and childminders could close within the next 6 months due to planned cuts 

Tulip Siddiq MP, Labour’s Shadow Minister for Children and Early Years, responding to new Early Years Alliance data showing that one in four nurseries could close within six months if the Government goes ahead with planned funding cuts from January, said:

“The coronavirus pandemic has dealt a hammer blow to childcare providers, many thousands of which are on the brink of collapse.

“At a time when targeted support is needed to save our nurseries and childminders, it beggars belief that Ministers are planning to slash their existing funding from January.

“The early years sector is essential for working families, young children and our economic recovery. It must be properly supported throughout this crisis rather than hung out to dry.”

Tuesday 24th November: New research announced today from the Early Years Alliance has found that 1 in 4 nurseries and childminders could close within the next 6 months when the government cuts ‘free childcare’ funding to the sector from January 2021. Pregnant Then Screwed and the Early Years Alliance are calling for urgent government intervention to keep childcare from facing an imminent collapse.

Throughout the pandemic, the government has continued to fund ‘free’ childcare places on the 15/30 hours scheme at pre-pandemic occupancy levels. However, the government has confirmed that this level of funding will not continue into 2021: responding to a recent Parliamentary Question from Tulip Siddiq MP, children and families minister Vicky Ford said that local authorities’ funding to childcare providers would return to “‘funding following the child’ from 1 January 2021.” 

A new survey of more than 2,000 childcare providers in England conducted by the Alliance found that this decision could leave a quarter of nurseries and childminders unable to survive beyond the end of May.

Previous Early Years Alliance research found childcare providers are currently experiencing a  21% fall in occupancy levels compared to this time last year.   

Joeli Brearley, CEO and Founder Pregnant Then Screwed explains,

‘’Occupancy rates for nurseries and childminders have depleted during the pandemic due to parents being furloughed, flexible working patterns, and concerns about infection rates. This is a temporary decrease in occupancy and we expect these rates to rise again once the vaccine has been administered. Obviously this decrease in occupancy has had a significant impact on the income nurseries can generate, yet simultaneously their overheads have only decreased marginally. The Government agreed to continue funding nurseries and childminders at the same level they had been doing before the pandemic hit and that helped hundreds of childcare facilities ride the financial storm, but now they want to reduce that funding. To do this now will be the death-knell to the childcare sector.’’

In just 48 hours the ‘Save our Nurseries’ campaign has seen over 1500 emails and 400 tweets to MPs calling on their support to stop Rishi Sunak and Gavin Williamson from cutting funding to the sector. 

As Joeli Brearley says: ‘Good quality, affordable childcare is the first line of defence against poverty and health inequalities for children. This cut to funding will have a disproportionately negative impact on nurseries in areas of deprivation thereby decreasing the attainment gap. Childcare is not a cost, it is an investment, with studies showing that for every £1 invested in childcare there is a £3 return.’

Childcare providers need the support now so that they can ride out the impact of the pandemic. Local authorities have a statutory duty to ensure a sufficient supply of childcare places. If insufficient funding means that providers close, local authorities may not be able to meet this duty.

Neil Leitch, chief executive of the Early Years Alliance, said:

“We know that the next few months are likely to be make-or-break for the early years sector in England. We now have a situation where some parents are still opting not to take up their child’s early years place due to safety concerns, while others currently do not need as much childcare because of changing working patterns, furlough or unemployment. As a result, many thousands of nurseries, pre-schools and childminders are experiencing a decline in income that is simply unsustainable. That’s why we are urging the government to commit to extending current early entitlement funding support until at least the end of the spring term. While this alone will not solve all the sector’s problems, as our survey shows, failure to do so could be catastrophic for the early years. At a time when the early years is more important than ever, both for supporting parents to return work as the economy recovers, and ensuring that all children have access to quality early education, it is absolutely vital that the government provides the urgent financial support that the sector needs to survive this pandemic, and beyond.”

Michala Brunt, Milestones Childcare Ltd, said: 

‘People aren’t registering for nurseries like they were before Covid hit, we’ve had barely any new children start over the last few months. We’re okay at the moment because we have government funding for the places that are reserved for the children that haven’t returned yet, but come January if that funding goes then we could be 20 children down. If we don’t get a good intake of new children then we will be down by a substantial amount. It will impact staffing levels, and we’ll have to look at the hours that we are open. Then we will be asking – are we able to pay all the bills?’

An earlier survey by the Alliance, released in October, revealed that 1 in 6 nurseries and childminders could close as soon as Christmas without additional support. Before the pandemic, 11% of childcare providers were running at a significant loss   [1] with the industry suffering an estimated £662m shortfall in funding   [2] from the Government. 

Survey was conducted by the EYA with 2,161 responses: 

56% (28%+ 28%) of providers say it would have a negative or very negative impact on them – and of those, nearly half (45%) don’t think they would be able to remain viable for more than 6 months (5% + 16% + 24% = 45%)

How would you describe your provision? Please choose the closest option
Nursery	26%
Pre-school	59%
Childminder	12%
Maintained nursery school	0%
Primary school nursery class	0%
Out-of-hour club	1%
Specialist provision	0%
Other (please specify)	1%
The Department for Education is currently funding local authorities based on pre-Covid early years attendance levels. However, as of January 2021, the government’s plan is to go back to basing early entitlement funding on actual attendance numbers. What kind of financial impact would this proposed change have on your provision?
Very positive financial impact	6%
Somewhat positive financial impact	6%
Neither negative nor positive financial impact	32%
Somewhat negative financial impact	28%
Very negative financial impact	28%
If the government goes ahead with plans to base early entitlement funding on actual attendance as of January 2021, rather than basing it on pre-Covid attendance levels, how long do you anticipate being able to remain viable?
Less than a month	5%
1 – 3 months	16%
4 – 6 months	24%
7 – 9 months	13%
10 – 12 months	18%
More than a year	24%

Question asked in parliament and the corresponding response from Vicky Ford MP:

The Department for Education has provided the following answer to your written parliamentary question (97657):

Question:

To ask the Secretary of State for Education, whether he plans to continue funding early entitlements for free childcare at the rate of occupancy before the covid-19 outbreak after January 2021. (97657)

Tabled on: 30 September 2020

Answer:

Vicky Ford: 

On 20 July, we announced we will continue paying local authorities for the childcare places they usually fund for the autumn term. This will give nurseries and childminders another term of secure income, regardless of whether fewer children are attending.

At the same time, we set out our intention to return to the normal early years funding process from the start of 2021. This would mean using the January 2021 census to drive funding allocations for local authorities for the 2021 spring term, and that local authorities’ funding to childcare providers would return to ‘funding following the child’ from 1 January 2021.

We also made clear in that announcement that we would review the funding approach for the spring term given the uncertain times ahead with the COVID-19 outbreak. We are doing so and will announce our approach in due course.

The answer was submitted on 05 Oct 2020 at 17:27.

Summary of survey findings: 

54% (27%+ 27%) of providers say it would have a negative or very negative impact on them and of those, nearly half (46%) don’t think they would be able to remain viable for more than 6 months. 

Meaning that 1 in 4 (24.8%) are likely to close in the next 6 months without funding.