Council tells DfE of settings in financial crisis

• Lancashire tells Education Secretary it may fail to provide enough places
• 11 closures since 30 hours

Lancashire County Council has written to the Education Secretary with concerns it will not be able to provide sufficient childcare places if early years settings there continue to close.

According to Sharon Alexander, owner of Rosy Apple Childcare and a member of Lancashire Schools Forum, since the 30 hours came in, 11 nurseries have closed – including one of her own settings – or are due to close by the end of March. The reasons for the closures are mainly down to ‘poor funding’.

Within the council’s letter, its cabinet member for children, young people and schools, Susie Charles, and chair of the Education Scrutiny Committee, Christian Wakeford, ask Education Secretary Damian Hinds to review the Early Years National Funding Formula to ensure money is distributed more evenly across the country.

Lancashire receives funding of £4.30 per hour, per child – one of the lowest rates in the country. Funding is frozen until 2020.

The councillors state in the letter, ‘We are very proud of the early years provision in Lancashire. However, we are extremely concerned about the financial position of providers going forward.

‘Monitoring of our maintained nursery schools reveals that many are already in a deficit budget position or facing financial difficulties. In the PVI sector, we know that many settings in Lancashire have closed in the last few months and more will struggle with financial viability in the future.

‘Our analysis indicates that we currently have sufficient early years places available to meet demand, but we are concerned that further closures and amalgamations will significantly reduce the places available and mean that we may have difficulty in fulfilling our statutory duty to secure sufficient childcare.’

A Freedom of Information request by Nursery World last year revealed Lancashire was among the top five local authorities for the most net nursery closures.

Nursery closures

Among the nurseries that have closed in Lancashire is Rosy Apple Childcare’s Little Achievers@Ribbleton.

The 66-place term-time-only setting closed on 8 March due to a shortfall in funding for the ‘free’ entitlement which, along with rising costs, meant owner Sharon Alexander could no longer afford to keep it open.

All children and staff have been able to transfer to the group’s two other nearby settings in Preston, which are owned rather than rented.

Ms Alexander’s setting is the second in Ribbleton – one of the UK’s areas of greatest deprivation – to have closed in the past six months, amounting to a total loss of more than 150 places. The Safehands Nurseries group closed its setting in Ribbleton Avenue at the end of last year.

Another setting that is due to close at the end of the month is Little Acorns Community Nursery in Burnley, which is also an area of high deprivation.

The nursery, which has been operating for 15 years, provides care for 27 children.

Trustee Peter Hindle explained, ‘Despite all our great work, the Government, with its unequitable distribution of money through the National Funding Formula and its ongoing failure to increase payments in line with minimum wage increases, no longer pays us enough to continue to provide the so-called free entitlement. Small nurseries in deprived areas are struggling most with this.

‘We have made all the efficiency savings we can. The current model does not work.

‘The rates for the next year are fixed and we cannot survive on them. The trustees have extensively reviewed the position to the end of March along with the budget for the following 12 months and have determined it is not financially safe to continue.

‘Like so many other nurseries around the country we are now paying the ultimate price for the Government’s policy failure.’

Other shutdowns

Other nurseries across the country are also feeling the strain of underfunding.

St Mary Magdalene Independent Catholic Nursery in Bexhill-on-Sea, East Sussex, is closing at the end of the summer term. The term-time sessional nursery has been run by the local parish since 2002.

In a letter to parents, the parish priest stated, ‘In the last year, we have experienced a number of financial pressures that means the nursery is no longer viable; funding for two-year-olds has been consistently low and, in September 2017, the Government introduced the 30 hours. Following a planned refurbishment in 2016, the nursery account is running a planned overdraft, but with changes to nursery funding, our inability to balance our year-on-year budget [means] we must now take this difficult decision.’

Sector response

According to the National Day Nurseries Association (NDNA), nursery closures are on the rise.

Chief executive Purnima Tanuku said, ‘Looking at our recent figures, we know that since September 2019, there have been more closures in the first six months of the year compared to the same period last year.

‘Each of these closures negatively impact on the continuity of care and the development of the children affected. It is heart-breaking for the staff, children and families in those settings and has a wider impact on the local economy and wider community.’

She added that the NDNA is consistently lobbying the DfE and the Treasury to try to improve the ‘critical’ financial situation, but ‘Brexit appears to be the Government’s top priority’.

The NDNA is also calling on the Government to invest the £600m underspend on Tax-Free Childcare on the funded entitlement to help providers.

Neil Leitch, chief executive of the Early Years Alliance, said he had lost count of the providers who have told him they may have to close because of increases to the minimum wage. ‘Ministers should know as well as anyone that staffing costs make up around three-quarters of provider outgoings – and that many have seen a real-term cut in funding in recent years.

‘So far the Government has chosen to ignore the mounting evidence and insist that everything is fine. My worry is that it will take a disaster like this latest round of cost increases before ministers are forced to admit how wrong they’ve been. By then it will be too late. It’s appalling that the Government continues to play chicken – not only with the early education of our youngest children but also with the tens of thousands of small businesses and livelihoods working to deliver it.’

A DfE spokesperson said, 'The number of childcare places has remianed fairly stable since August 2012, and with the introduction of 30 hours, we have had no reported issues about a lack of available places.'