Survey highlights funding crisis as nurseries and childminders fear closure by Christmas

• 1 in 4 settings in the most deprived areas could close before Christmas
• Half of early years providers need emergency funding to survive the next six months

The stark findings come from an online survey of 2,000 nurseries, pre-schools and childminders by the Alliance, which highlights the impact the pandemic has already had on the sector. 

Two-thirds of setting respondents (65 per cent) said the Government hasn’t provided enough support for the early years sector during the Covid-19 pandemic. 

The Alliance is calling on the Chancellor to commit to an Early Years Sufficiency Fund at the upcoming Spending Review to ensure that there are enough early years places to meet families' needs.

Based on analysis of responses to the survey, independent early years research analysts Ceeda estimate that around £240 million is needed over the next six months (see table below). 

This recommendation is in addition to the Alliance's ongoing call for Government to commit to reviewing and revising early years funding levels annually to ensure that funding rates reflect rising provider costs, particularly increases in the national living and minimum wages, in the long term.

The survey, which was carried out between 30 September and 9 October, found that:

• One in six (17 per cent) early years settings could close by Christmas if their income doesn’t increase, rising to one in four (26 per cent) in the most deprived local authorities 
• Only a quarter (25 per cent) of providers expect to make any profit between now and March 
• Just over half (51 per cent) say they need emergency funding to stay open over the next six months 

Nurseries commented on how they had not received extra funding from the Government to pay for PPE, extra cleaning and other resources needed to make their settings safe during the pandemic.

Samantha Ashton, director and manager of The Wittering's Village Pre-School in East Wittering, said, ‘I feel the early years has received no support through this pandemic. The only support we have seen is a grant from our county council which hardly covered the major losses we are experiencing as a business.  

‘We have the welfare of all our staff and families to consider daily, and there is no financial support for the ongoing costs of PPE, uniforms and the extras we have to provide to keep our business safe and secure through this pandemic.’

Despite being able to open more widely since June, some providers have seen attendance drop so dramaticallythey have already been forced to close or make staff redundant.

One Ofsted graded outstanding childminder said she was ‘devastated’ to give up her childminding business of 18 years because of the impact of the coronavirus crisis, which had left her with no children on her books.

Former childminder Ann Ross from Dartford said, ‘I was devastated when the Covid pandemic, something I could never have planned for, totally decimated and wiped out my business. I went from being full with no expected vacancies available till September 2021, to having no children on roll.  

‘I have not earned any income since February and had to cash in my small pension to pay my bills. Sadly, with no income and very little help and no business forthcoming, I have had to look elsewhere for work.’

Michelle Angus of CheekieChops Childminding based in Sunderland, said, ‘In March, I had 45 children on my books, but today I have 18. I have just done my accounts, and have lost three-quarters of income compared [to] this time last year. I have had to end the employment of one assistant and reduce the hours of other assistants already.’

‘Soul-destroying’

Sharon Brayer, manager of Busy Bees Pre-school, (an independent provider not part of Busy Bees group), based in New Milton, Hampshire, said she was ‘fearful’ for the setting’s future.

‘Busy Bees has been running for 28 years and we do not know how much longer we will be open.  

‘Poor funding is the main reason, and adding Covid into the mix has left us with serious financial difficulties. That in itself is soul-destroying, then you add in the worries everyday about the virus – it has left us worried, scared, stressed and not knowing how we can financially recover.  

‘New children have not taken up their places - we lost money during lockdown and still are. Staff are suffering with mental health issues. If we had more financial support to sustain us, it would be one less thing to worry about. We are expected to remain open, which we have done through lockdown itself, but feel like we have been shafted by the powers that be. We are all very despondent.’

Call for an Early Years Sufficiency Fund

Ceeda’s estimate for a six-month Early Years Sufficiency Fund was based on provider responess to the survey question: ‘Recognising that it might not be possible to keep every member of your team (if applicable), how much extra money would you need per month on average over the next six months to keep your doors open in the long term?’

Source: Ceeda

‘Urgent action needed’

The Alliance's findings follow the Government's own research on the impact of Covid-19 on early years settings, published earlier this week and carried out in July, which found that around half of England’s childcare providers said they would be unable to survive financially for another year.

Andrew Bazeley, policy, insight and public affairs manager at the Fawcett Society, said, ‘Without sufficient childcare, mothers' employment will fall off a cliff. We need these providers to still be around when demand comes back - we won't just be able to magic them back into being.

‘We bailed out the banks. We've bailed out the train companies. Childcare is infrastructure too, and for a fraction of the cost we can save our nurseries. We urgently need to see action from Government.’

Megan Jarvie, head of Coram Family and Childcare, said the findings followed its research with the Institute of Fiscal Studies in September, which found that more than double the number of private sector nurseries than before the pandemic would have been running at a significant deficit during lockdown, with less than £4 in income for every £5 of costs.  

'This new research reveals the devastating financial impact of the crisis on providers and contribute to a worrying picture of the significant new challenges facing a childcare system already under pressure,' she said.

Councillor Judith Blake, chair of the Local Government Association’s Children and Young People Board, said, 'Childcare providers have been a vital part of the nation’s response to Covid-19 and this stark survey shows the plight that many continue to face. It is vital that all parents have access to the good quality childcare they need to enable them to return to work, while ensuring that children have the support, they need to develop school readiness.

'However, early years and childcare providers have not had access to the same funding as schools to stay open. As this survey also shows, this has combined with a slow return to early education which is putting settings at risk.

'It is essential that we have enough childcare places to support families to ensure the country can recover from Covid-19, both economically and socially. We are calling on the Government to provide an urgent injection of funding in the Spending Review to protect childcare providers at risk of closure as a result of the pandemic.'

Tulip Siddiq MP, Labour’s shadow minister for children and early years, responding to a survey by the Early Years Alliance revealing that said, ‘Labour has been warning for months that the childcare sector is on the brink of collapse. 

‘Today we learn that this collapse is now imminent and set to begin just as families enter the toughest winter for a generation. As ever, this will hit the most deprived communities hardest. 

‘Urgent action is needed by the Government to save the nurseries and childminders that working parents and children rely on. It is now or never to save the childcare sector, and it has to be now for the sake of our economy.’

In response, the Department for Education said that the sector had received ‘significant’ funding over the last few months, and that it had been clear that funding for free early years entitlements hours for two-, three- and four-year-olds would continue even if settings did not open. It said this meant that, on average, 50 per cent of their income was paid to councils, even if settings were closed.

A DfE spokesperson said, ‘Nurseries, pre-schools and childminders have received significant financial support over the past months and will benefit from a planned £3.6 billion funding package in 2020-21 for free early education and childcare places. 

‘We are providing extra stability and reassurance to settings that are open by “block-buying” childcare places for the rest of this year at the level we would have funded before coronavirus – regardless of how many children are attending.’