Coronavirus: Alliance letter highlights gaps in financial support for childcare sector

Discrepancies in the way the Government has set up schemes designed to provide emergency funding for businesses during the coronavirus outbreak mean that many early years settings are not eligible for this financial help.

The letter, sent to Mr Sunak and the business secretary Alok Sharma, from Neil Leitch, the chief executive of the Early Years Alliance, urges the Government to take action to urgently address the gaps in support for the sector.

The move comes as more than 170,000 people have signed an online petition calling for the Government to row back on changes to furlough guidance that limits the amount that providers can claim back from the Government to pay early years workers on furlough. According to the Alliance, around 4,000 providers and 2,500 parents have also written to their local MP about the matter.

The letter follows the publication yesterday of the Alliance’s survey of 3,000 nurseries, pre-schools and childminders, which found that one in four childcare providers in England think that it is unlikely that they will still be operating in 12 months’ time.

In the letter Mr Leitch said, 'Clearly, this would have an incredibly detrimental impact not only on the early learning experiences of our youngest children, but also on the ability of parents to return to the workplace, which in turn could have a devastating effect on the recovery of the British economy.

'I know that the Government has already unveiled a substantial package of support for businesses and workers across a range of sectors and industries. However, our survey highlighted a number of areas where early years providers are falling through the gaps of this support.

'As such, I am writing to you to urge the Government to take urgent steps to safeguard this vital sector and ensure that that the tens of thousands of childcare settings who offer a critical service to parents across the country are given the support they need to survive the coronavirus crisis and beyond.'

The survey revealed that the last-minute change to the way that the Coronavirus Job Retention Scheme (CJRS) and the early entitlement funding work together means that 47 per cent of eligible settings may need to make staff redundant.

It also found that 75 per cent of eligible settings had understood that they would be able to access both schemes fully, and 71 per cent had already furloughed staff.

The new guidance published on 17 April – four weeks after the initial guidance - means that providers are only able to make furlough claims for the proportion of early years providers’ wage bill that is equivalent to the proportion of their income that is obtained from private sources.

The letter states, ‘While the principle of this guidance is reasonable, the change came after nurseries, pre-schools and childminders who employ assistants spent four weeks planning, budget and furloughing staff on the basis of the existing Department for Education guidance, which stated that settings could benefit from both schemes, with no reference to any potential conditions or limitations.

‘We recognise that the JRS is a broad scheme applying to multiple sectors; however, given that the Government was able to develop specific restrictions to the scheme that only apply to early years settings and other businesses who receive a mix of public and private funding, there should be no reason that specific allowances to the childcare sector, recognising the negative impact that the last-minute guidance revision has had on providers, could not be introduced in the same way. As such, we urge the Government to remove the restrictions placed on this scheme at the last-minute and to honour the original guidance issued to the sector, upon which the vast majority of early years settings made their business decisions and plans.’

Business support

The Alliance also says it has also received ‘a huge amount of correspondence’ from childcare providers about ‘unfair discrepancies in the availability of business support grants for various sectors, and the exclusion of many small businesses in need of support as a result of the current overly-narrow eligibility criteria.’

It points out that not all childcare providers are eligible for the £10,000 available from the Small Business Grant, because it is based on receiving business rate relief.

Providers who, it says, ‘by any other definition would be considered small businesses, but who aren’t registered for rate relief (because, for example, they are based in premises that have no rateable value, or because they rent their premises), are excluded.

‘This is clearly unfair and contradicts the clear aims of the grant to support small businesses through this crisis. ‘

Providers should be eligible for the additional discretionary fund aimed at small businesses with ongoing fixed property-related costs who are not eligible for the business grants funds scheme, the letter says.

The Government has asked local authorities to “prioritise businesses in shared spaces, regular market traders, small charity properties that would meet the criteria for Small Business Rates Relief, and bed and breakfasts that pay council tax rather than business rates”.

‘It is our view that either this recommended prioritisation should immediately be extended to include childcare settings who fall outside of the scope of existing business grants, including childminders, or that the eligibility criteria for the original scheme should be amended to ensure that childcare business who are not registered for rate relief are still able to apply.’

The childcare sector is also excluded from the £25,000 government grant available to businesses in the retail, hospitality and leisure sectors with a rateable value of between £15,000 and £51,000.

‘This is clearly unfair and inconsistent and is having a significant impact on those providers whose rateable values mean that they are not eligible for the Small Business Grant, but who are still struggling financially,’ says the letter.

The Government should therefore introduce an equivalent fund for childcare providers.

Childminders

The letter also warns that there is a risk that thousands of childminders will be lost from the sector.

While some of the country’s 36,000 childminders are eligible for the Self-employed Income Support Scheme, the support from it is ‘minimal’ because the way the support is calculated is based on profits rather than income, and many childminders have made little profit in recent years.

Moreover, only around 2 per cent of funded three-year-old places are in childminding settings, which means that very few childminders will benefit from the Government’s decision to continue early education funding for providers during the coronavirus outbreak.

Many childminders have also told the Alliance that the support from universal credit ‘is extremely limited, due to their partner’s income or current savings.

‘The outlook is particularly concerning’ for new childminders who are not eligible for the self-employed support scheme, the letter says.

The Government should therefore provide ‘a comprehensive package of support for childminders, including an advance on the Self-employed Income Support Scheme to ensure that childminders receive the help they need ahead of June, to reflect the pivotal role that they, like all childcare providers, will play in helping to restart the economy; enhanced financial support to cover loss of earnings for all childminders, including those who are newly-registered; and for 2019/20 tax-returns to be taken into account for the purposes of the Self-employed Income Support Scheme.'

The letter concludes, ‘We know that the ongoing financial support being provided by the Government is costly, but the long-term sustainability of the childcare sector is absolutely pivotal to the ability of parents to return to work post-lockdown.

‘As such, we ask that the Government views the above recommendations not simply as spending, but as a wholly necessary investment into the economy as a whole.’