New research reveals the financial impact of Covid on early years settings

At the same time, they were having to find extra money to cover staff absences and pay for additional cleaning products and PPE.

The latest Department for Education Survey of Childcare and Early Years Providers and Coronavirus (SCEYP COVID) reveals that providers received less than expected in parent-paid fees, with group-based providers being the hardest hit.

During the time of the survey, 27 November-20 December 2020 (described as wave 3), group-based providers (GBPS) who responded reported losing an average of £1,176 a week in fees. They were also the provider were more likely to report a reduction in the number of operating hours.

On average, school-based providers lost £401 a week and childminders £230 a week in parental fees.

A total of 2,964 providers (293 SBPS, 1,147 GBPS, 1,524 childminders) responded to the wave 3 survey, carried out by NatCen Social Research and Frontier Economics. The statistics have been weighted to provide a snapshot representative of all providers in England.

This survey is the third in a series (Wave 3).

Opening hours

The figures show that there was a slight drop in number of group-based providers open for more than eight hours per day between wave 2 and 3. At wave 2, 42 per cent were open for more than eight hours per day compared to 37 per cent at wave 3.

The most common reason for reduced operating hours was a lack of demand from parents.

Childminders (CMS) were more likely to have increased parental choice or flexibility in hours, with 31 per cent doing so, while 13 per cent of open SBPs and 18 per cent of GBPs decreased choice and flexibility in hours.

Across all types of provider, fewer children, including under and over the age of two, attended settings than what was expected during wave 3.

Despite this, providers were slightly more confident about their financial sustainability for another year or longer than they were during wave 2 of the pandemic (25 September – 18 October 2020), with a total of 47 per cent of GBPs and 56 per cent of CMS feeling ‘reasonably confident’.

Closures

Of all the providers, childminders were more likely to report closing temporarily or permanently this wave compared to the previous one. One reason given was a lack of demand from parents.

Just 4 per cent of GBPs reported being temporarily or permanently closed between November and December 2020. The most common reason was that it was no longer financially sustainable to open.

Staffing

According to the statistics, three-quarters of nurseries increased their use of supply staff or the hours of their existing employees to cover staff absences during wave 3 of the pandemic.

A total of 41 per cent of open school-based providers increased the use of agency or supply staff between 27 November and 20 December 2020, while 35 per cent of group-based providers (GBPS) increased the hours of permanent staff.

Open SBPs and GBPs reported that their highest additional weekly cost was for staff to cover absences, with mean weekly costs of £311 and £104 respectively.

During the time of the survey, more than 30 per cent of open GBPs and 29 per cent of SBPs had one–to-four members of staff absent due to COVID-19.

A total of 13 per cent of SBPS had five or more staff members off due to the virus, compared to 3 per cent of open GBPS.

Group-based providers were more likely to have made use of the Coronavirus Retention Scheme during wave 3 with 74 per cent furloughing staff, compared to 11 per cent of school-based providers.

Cleaning and other extra costs

School-based providers

Comments

Children and Families Minister Vicky Ford said, ‘The majority of parents who used formal childcare before the pandemic are accessing it as we make the transition out of lockdown, which is testament to the hard work that early years staff are putting in to support and reassure families, while delivering crucial care and education to our youngest children.

‘We are providing top-up funding for councils who saw a rising demand of free childcare entitlements over the spring term, capped at 85 per cent of their census level in January 2020. We will also temporarily adapt how we fund local authorities and providers over the next financial year by using their termly attendance count in the summer and autumn terms, to protect their funding income and provide extra reassurance.’

Purnima Tanuku, chief executive of National Day Nurseries Association (NDNA), said, 'It’s important that the DfE are collecting this data from providers so they understand the challenges the sector has been facing on the frontline. This research backs up what we have been saying since the pandemic began.

'Providers' income is only two-thirds of what they would normally expect whilst they’re reporting additional costs, this was at a time before the worst of the pandemic hit in late December and January. More than half of nurseries did not feel confident in their financial sustainability and this is concerning for the future of the sector.

'The DfE now has its own research which backs up our calls for extra financial support to childcare providers to help weather the storm.'

Neil Leitch, Commenting, Neil Leitch, chief executive of the Early Years Alliance, said, 'This survey is just the latest in a long list of documents that catalogue the completely unsustainable pressures currently facing the early years sector. It is incredibly frustrating to see yet more evidence of the significant financial impact the pandemic is having on the sector, at a time when the Government remains unwilling to provide anywhere near the support that providers need to remain viable in the long term.

• The survey findings are available here