The DfE's latest Pulse survey of early years providers reveals that for 48 per cent of group-based providers and 34 per cent of childminders, their income does not cover their costs.
The survey was carried out in May, and again in July. Each time, over 1,000 providers responded. Their responses have been weighted to provide a snapshot that is representative of the entire sector.
Asked whether they thought the new funding rates coming would make a difference, 39 per cent of group-based providers and 23 per cent of childminders said their profitability would reduce.
For the majority (84 per cent) of respondents who said their profitability would reduce, it was because of the September 2024 funding rate for three and four-year-olds. For 36 per cent, it was the two-year-old rates.
Insufficient funding rates was one of the main challenges reported by providers to deliver the funded offer, as was a lack of staff.
The most common action taken by settings to help meet staffing requirements in response to a rise in demand was increasing pay to improve retention.
Other actions included asking managers to work with the children more than they normally would to meet staff: child ratios, which some respondents said had impacted the quality of care having more staff work overtime, and spending more time on recruiting more staff.
According to the survey findings, Level 3 staff continue to be the hardest level to recruit.
EYFS flexibilities
The survey findings also reveal most respondents, 99 per cent, haven’t and don’t plan to be more flexible with ratios to make more places available.
Among group-based and school providers, half said they haven’t and don’t plan to include practitioners without a Level 2 maths qualification within Level 3 staff: child ratios.
Neil Leitch, chief executive of the Early Years Alliance (EYA) said the findings suggest the sector is in need of ‘significant support if there’s any chance providers will be able to deliver the remainder of the expanded offer sustainably.’
He explained, ‘The latest provider survey shows that longstanding sector challenges must be addressed ahead of the final phase of the early entitlement expansion.
‘As the final phase fast approaches, it has never been more important to ensure the sector has enough capacity to meet the Government’s promise to parents.’
