Out-of-school sector threatened with collapse

Nicole Weinstein
Wednesday, December 9, 2020

A ‘worryingly high’ proportion of out-of-school providers are operating at a loss – and more than half of them expect to be closed within a year, a survey by the Out of School Alliance (OOSA) reveals.

The Out of School Alliance warns that without sustainability funding, many after-school, breakfast and holiday clubs will close
The Out of School Alliance warns that without sustainability funding, many after-school, breakfast and holiday clubs will close

Nearly half (48 per cent) of the 313 after-school, breakfast and holiday club providers that responded to the survey about the impact of the pandemic on their business, reported that they were running at a loss.

Just 11 per cent were making a profit, while 42 per cent said that they were only covering their costs. When asked how long they thought that they could continue with these current occupancy levels, 56 per cent of them thought they would be closed within the year:

  • 12 per cent thought they would be closed within three months
  • 18 per cent thought they would be closed within six months 
  • 26 percent thought they could last between six months and a year. 

However, 44 per cent thought that their current occupancy levels were sustainable in the long term.

The report states, ‘Presumably these represent the clubs that are currently operating at fairly close to their normal occupancy levels, or which have managed to pare down their offering to a break even level through reducing staffing or opening hours, and closing less profitable settings.’

The number of childcare places provided by the respondents to this survey is approximately 34,168, which represents half the number in the previous survey in August.

The report cites that part of the reason for the reduction in the amount of providers who responded is due to the fact that many settings permanently closed down between August and November.

It states, ‘Many providers are racking up debts in order to remain open, and others are simply calling it a day and closing down…

‘Although not captured in the survey, we also know from communications with our members that many clubs have already closed down permanently, or are about to close.’

Occupancy levels

The survey, conducted from 5 to 20 November, looked at how providers were faring now, following the re-opening of schools in September and after a half term or more of operating under a variety of different restrictions.

Compared with last year this time, 92 per cent of settings reported a drop in occupancy levels, with as many as 36 percent operating at less than 50 per cent of their usual occupancy levels and nine per cent operating at less than a quarter (25 per cent) of last year’s occupancy levels.

Providers complained that by schools insisting on clubs using exactly the same bubbles, they were effectively imposing a cap on the numbers that a club could take, but were still expecting providers to pay the same amount of rent as if they had their normal head-count.

More than half (51 percent) of providers said that they had to reduce the number of places they could offer in order to meet the following protection measures:

• Meeting infection control measures (36 per cent)
• Insufficient space for bubbles and social distancing (13 per cent)
• Staffing issues (2 per cent)

Several respondents also commented that they have had to scale back their offering due to a ‘dramatic fall’ in demand due to changes in parents’ working patterns and redundancies.

'Bigger wave of closures'

Clare Freeman, co-director of OOSA, said, ‘Providers are suffering from the double whammy of a whole raft of increased costs, whilst faced with significantly lower revenue. Providers are also having to contend with difficult relationships with schools which are preventing them from operating more efficiently, as well as a lack of the targeted financial support enjoyed by other sectors. Unsurprisingly, providers are reporting high levels of stress and anxiety, and many clubs have already closed permanently.’

She added, ‘Without targeted financial support from the Government we fear that we are going to witness an even bigger wave of closures following the Christmas holidays. It is regrettable that while Northern Ireland, Scotland and Wales have all made sustainability funding available to out of school clubs, recognising the essential role that they play, the same support has not been made available to wraparound childcare settings which operate in England.’

OOSA is calling on the Government to provide some form of sustainability funding for the sector, to make up the shortfall in numbers and enable providers to remain open with reduced occupancy until the situation improves.

It also wants the DfE to provide schools with clear direction, emphasising the importance of wraparound provision remaining operational.

The report states, ‘Such direction for schools needs to recognise that wraparound provision is allowed to be more flexible regarding the composition of bubbles, and taking children from other schools, and only with such flexibility can clubs hope to remain financially viable.'

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