Coronavirus: Labour analysis finds 19,000 childcare providers at risk of closure

Annette Rawstrone
Wednesday, July 29, 2020

A ‘perfect storm’ of rising childcare costs and thousands of providers at risk of closure due to a lack of government support will make it impossible for many parents to return to work, the Labour Party is warning.

Shadow education secretary Kate Green visiting a London Early Years Foundation nursery earlier this month
Shadow education secretary Kate Green visiting a London Early Years Foundation nursery earlier this month

New analysis by Labour of data from the Early Years Alliance has found that nearly 19,000 childcare providers in England that are at risk of closing in the next year.

Meanwhile, childcare costs have risen between two and a half and three times as fast as wages since the Conservatives came into office in 2010. These figures are taken from Coram Family and Childcare’s Childcare Surveys of 2010 and 2020.

The Alliance found that a quarter of childcare settings felt it was 'somewhat' or 'very unlikely' that they would be open in 12 months time, meaning nearly 19,000 of England’s 75,000 childcare settings are now at risk of closure.

Labour states that childcare has repeatedly been neglected by the Government in its response to the crisis despite the sector repeatedly raising concerns about long-term underfunding from Government. Combined with a lack of targeted support during the coronavirus pandemic it will make it impossible for many providers to remain viable.

The opposition party highlights that the Chancellor did not mention the childcare sector during his economic update. The Prime Minister also failed to mention the sector when outlining initial plans to reopen the education system. He urged parents to return to the office without being given any additional support to access the childcare they need to return to work.

Many families will struggle to access support over the summer, with the Labour analysis revealing that spending on children’s services has been cut by hundreds of millions of pounds in real terms since 2010.

There will be further costs or challenges in accessing childcare if families cannot turn to the informal childcare provided by grandparents. A survey by the Department for Education found that over one in four children aged 0-4 used childcare provided by grandparents. Without this support available families will find themselves needing to find and pay for additional support.

Despite some expansions of free and subsidised childcare for two-, three- and four-year-olds, many of the most disadvantaged children will not be able to access much of this support. There is significantly less support available for children of school age, which will create particular challenges for parents who need to access childcare over the summer.

Labour shadow secretary of state for education Kate Green is calling on the Government to urgently provide targeted support to the childcare sector, and ensure that parents can access the childcare that they need

‘The Conservatives have created a perfect storm for working parents across the country, with a crisis in the childcare sector locking children out of early education and making it impossible for many parents to return to work,’ she said.

‘Ordering parents back to work without allowing them to access the childcare they need is a stark reminder that Boris Johnson is completely out of touch with the needs of working families.’


Risk of Closure Figures



Total providers

Unlikely to be open (%)

Providers at risk of closure





North West




North East




Yorkshire and the Humber




East Midlands




West Midlands




East of England








South East




South West






Figures for the number of providers are from Ofsted. All figures on the proportion of early years providers that believe they are unlikely to be open in twelve months’ time are from a survey carried out by the Early Years Alliance. The national figure is here. The regional figures were provided by the Early Years Alliance.

Commenting on the analysis, Early Years Alliance chief executive Neil Leitch acknowledged that many parents have been struggling with childcare costs as providers have been forced to increase fees to try to ‘plug the gap’ left by ‘inadequate’ Government funding.

Years of underinvestment into the sector had already left nurseries, pre-schools and childminders struggling to stay afloat, and so it’s no surprise that the additional impact of the coronavirus outbreak has meant that many are now reaching breaking point,’ he said.

‘With a quarter of nurseries, pre-schools and childminders fearing permanent closure within the year, rising to as much as a third in some regions, it is simply unacceptable for the Government to remain silent on this critical issue. The reality is that the support the government has provided to the early years sector so far is simply not enough to ensure that childcare providers are able to survive this crisis.

‘Failure to provide the funding the sector needs in the short- and long-term could mean the closure of thousands more providers, leaving parents without the childcare they need to return to work. If the government is serious about ensuring our economy is able to recover from the impact of the pandemic, it simply cannot let the childcare sector fall by the wayside.’

Purnima Tanuku, chief executive of National Day Nurseries Association (NDNA) said, 'For years, NDNA has been raising real concerns about sustainability in the early years sector, well before it was hit by the Covid pandemic.

'We have research going back ten years showing that government funding rates for so-called ‘free’ childcare places doesn’t cover the cost of delivering high quality early education.

'Since lockdown, nurseries have also had to absorb additional operating costs such as installing more handwashing stations and extra cleaning. But as costs have increased, their income has dropped due to low numbers of children.

'The Government has given most local authorities an extra 8p this year per hour per child, but this won’t even cover inflation, let alone take account of above-inflation national minimum and living wage rises.

'NDNA’s own research shows that 71 per cent of nurseries expect to operate at a loss over the coming months. That situation is clearly not sustainable, putting childcare places at risk and threatening childcare businesses.

'If this Government is committed to a plan for jobs and ‘levelling up’ for all our children, especially the most disadvantaged children, it must invest sufficiently in their early years education.'

A Department for Education spokesperson said, 'Nurseries, childminders and pre-schools have provided crucial support throughout the pandemic and are now more vital than ever as hard working parents return to work.

'This important sector has received significant financial support over the past months to provide stability and reassurance. We are continuing to provide extra security to nurseries and childminders 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.

'Early years providers will benefit from a planned £3.6 billion funding in 2020-21 for free early education and childcare places. From next year we will also be investing £1 billion to create more, affordable wraparound and holiday childcare places.'

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