One in four childcare providers fear permanent closure amid virus lockdown

The findings are based on an online survey of more than 3,000 nurseries, pre-schools and childminders by the Early Years Alliance published today (5 May). 

The Alliance said that historic underfunding and a lack of adequate government support during the coronavirus crisis were taking their toll and settings are worried that they will have to close permanently.

The findings show that:

• 25 per cent of respondents felt that it was 'somewhat unlikely' or 'very unlikely' that they would be operating in 12 months' time.
• 74 per cent of respondents said that the Government hasn’t provided enough support for early years providers during the coronavirus crisis.

The Alliance said that a key area of concern for childcare providers was the recent Government U-turn limiting furlough funding that childcare providers can access through the Coronavirus Job Retention Scheme (CJRS).

When asked what impact the new limitations on furlough funding would have, just under half (47 per cent) said they may need to make staff redundant. In addition:

• 37 per cent said they may need to retract offers to top up staff wages to 100 per cent
• 21 per cent said they may need to retract offers to waive or reduce parent fees

Government guidance published on 24 March stated that childcare settings could benefit from both early years entitlement funding and the CJRS. However, on 17 April, the Department for Education published new guidance, which placed limits on how much financial support providers receiving early entitlement funding could receive via the scheme.

The DfE has claimed the last-minute guidance was simply ‘further clarity’ on the support that early years providers can access via the two schemes.

Children's minister Vicky Ford has strongly denied that the Government has backtracked over furloughing early years staff.

However, the Alliance’s survey found that, of those childcare providers who employ staff, 75 per cent had thought they would be able to access the scheme in full alongside early entitlement funding, prior to the new guidance being published.

A similar proportion (71 per cent) had already furloughed staff ahead of the new guidance, while a further 11 per cent had informed staff they were going to be furloughed. 

Some nurseries that had originally stayed open to provide childcare for key workers have also had to close because of changes to the furlough guidance.

Shauna Caulfield Gates, owner/director of Orchard Day Nursery in Brighton, said she had initially stayed open for key worker children, despite operating at a loss, but has since closed.

‘I have a core team of 11 staff and furloughed 21 team members on Monday 23 March. We closed our doors on Thursday 30 April as we are no longer able to sustain the losses,' she said.

‘I wanted desperately to remain open to key workers and also be reasonable (as asked) so that I am not charging fees to the parents of children that cannot attend. We have no income.’

She claims that ministers had misled the sector about how much settings would be able to claim through the furlough scheme and that she had had to re-do her business planning.

‘I am so fearful about the future of my nursery, which is an outstanding provision. It remains to be seen if we will fold - that is almost 30 years of dedication to early years education: my team, my parents, and above all, my lovely children,’ the nursery owner said.

Other key concerns highlighted by the survey included: 

• Childcare settings who are unable to benefit from the Government’s £10,000 Small Business Grant because they rent their premises or are based in premises that don’t attract rate relief, or because their premises have a rateable value of more than £15,000 
• Childminders unable to receive any financial support from the Self-employed Income Support Scheme until June.
• Childminders who have operating for less than a year, and therefore cannot benefit from the Self-employed Income Support Scheme at all.

The survey ran from 22 - 29 April and received 3,167 responses.

Commenting, Neil Leitch, chief executive of the Alliance, said, ‘These findings paint a truly worrying picture of a sector struggling to cope with the impact of the coronavirus outbreak, and not getting anywhere near the support needed to make it through this crisis.

‘Many nurseries, pre-schools and childminders were already struggling financially long before the coronavirus outbreak hit as a result of years and years of severe underfunding – and while the Government has taken some steps to support providers during this period, as the results of the survey show, they are simply not enough.

‘The recent last-minute U-turn on the support that childcare settings can receive for furloughed staff in particular has had a hugely negative impact on the sector, and if not reversed, is likely to contribute to many avoidable redundancies and, in some cases, permanent closures.

‘Add to this the number of providers that the survey revealed are falling through the gaps of existing schemes – such as settings unable to benefit from business support grants, and newly-registered childminders excluded from the Self-employed Income Support Scheme – and it’s clear that government support for the sector is severely lacking.

‘Like schools, early years settings are an essential part of our social infrastructure, and will play a vital role in supporting parents to be able to return to work as the current lockdown situation is eased. We know that these have been an expensive few months for the Treasury, and that ministers may not see the value of committing to greater financial support for a sector that they have long overlooked and undervalued, but the reality is that abandoning the early years sector at this critical time will cause untold damage to this country’s economy in the long term.

‘The Government must now accept that it needs to do much more to support early years providers in this country – otherwise, we may not have a functional childcare sector when this crisis is, eventually, over.’

Tulip Siddiq MP, Labour’s shadow minister for children and early years, said, 'The childcare sector is on the brink of collapse. This survey is further evidence that the Government’s lack of support is forcing nurseries and other providers to close and sack staff.

'Losing a quarter of our childcare providers in this crisis would have a devastating impact on working families. Ministers need to wake up to the reality that many vital early years providers will be lost forever unless they step in to save our childcare.'

CASE STUDIES

The childminder

Sarah Graven, childminder, Knutsford Childminding in Knutsford, Cheshire

‘I have been an Ofsted registered childminder for 26 years and I worked with my husband (also an Ofsted registered childminder) and an assistant until 23 March, when parents made alternative arrangements for their children’s care and we temporarily closed. 

‘I registered our assistant for furlough but as the Government U-turned on how to calculate furlough when a setting receives funding, I had to take urgent advice and do some stressful calculations before putting in a claim. I will hopefully receive the remainder of the funding payment from the local authority in June, but this is not guaranteed given some councils are now U-turning on how much they pay providers who are currently closed. 

‘While the Self-Employment Income Support Scheme grant is due to be paid in June, it will typically be worth very little to childminders because it is based on net income, which is usually low for childminders as we plough so much back into our businesses. Many are also worried that the Government will U-turn on this as well and retain a percentage if they receive funding.

‘A high proportion of childminders are not eligible to claim universal credit because of partner income or small savings pots, while other will not receive the income support grant because they were registered in the last tax year after a national campaign to recruit new childminders. 

‘As a result, many childminders do not know how they are going to survive this crisis and are now considering their future.’ 

The village pre-school

Elizabeth Swatton, owner, Meadows Pre-School, Harefield, Middlesex

‘We are a small village pre-school, with six staff including myself. We made the decision not to charge our private-paying parents as we felt that many parents would be struggling financially and believed that the furlough money and funding would put us in the position we would have been in before our forced closure. Although we are offered to stay open for our key worker parents, they have all chosen not to take up places we have available - some because they can look after their children themselves, some due to concerns over fees and some due to safety fears.  

‘Our local authority Hillingdon has been good at supporting us - however, the financial support we have received through the furlough scheme is significantly lower than average payments for this term in previous years. As a result, while I had promised my staff I would pay wages at 100 per cent, which we did for March, I can no longer afford to do that for them.

‘This lack of government support is putting us in an awful situation for September: we will now have to make major cutbacks on staffing - possibly 50 per cent redundancies - and even this is dependent on how many children will be returning. As it stands, we have no idea how much money will be coming in, if any.’

New childminder

Janine Martin, childminder, Mini Caterpillars Childcare, Kent

‘I'm a new childminder, open less than a year. I have no funded children as they are all too young and not disadvantaged. I am open at the moment but no key worker children are attending. I am not entitled to the self-employed government grant, and cannot claim Universal Credit as my partner works.

‘I'm very worried about the potential closure of my little business and what it means for the future. Whilst I appreciate what the Government has done, I do feel that the small businesses that started up late last year or early this year are in deep murky waters with no idea how to get out.’

Established nursery

Vicky Chandler, manager, Westbury Day Nursery in Barking, Essex 

‘I have run my day nursery for 20 years now and have seen over the years the impact that low paid funding has had on it. The funding has never covered our hourly rate but as a setting we have had to accept this and tried to put things in place so that the financial loss didn't have a negative impact on the children. However, with the change to how we can access this furlough scheme, government support now doesn't cover my staff wages and so I will have to make staff redundant or close fully. 

‘A lot of nurseries like mine may not be financially able to carry on providing a quality service now, and ultimately their closure will leave high-risk children without a setting, which could result in a greater strain to the government, the NHS and the social care system, and have long-lasting effects on their mental health. My main concern is those poor children who may not have the escape of going to a setting now.’

Pre-school

Kay Howden, proprietor of Peter Pan Pre-School in Middlewich, Cheshire

‘Our setting, which is based in a multi-use church hall, is currently closed due to us having no key worker children and the church's reluctance to reopen the hall at the current time.

‘We have lost a large proportion of parental fees and as we are severely limited on our access to the furlough scheme, we are going to struggle financially in the future. In addition, as we operate in a multi-use hall, we are unable to benefit from the small business rate relief grant or any business rate holiday.

‘While we appreciate the continued early entitlement funding, we are vastly underpaid at £4.02 per hour. As such, we need to be able to fully access the furlough scheme in order to plan and remain buoyant in the future, and ensure that we will be able to continue to operate as the lockdown eases and ends.  As it stands, we won’t have any reserves so if we don’t pick up for September, I anticipate us closing in the next 12 months.’