Rise in setting closures linked to 30 hours

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A growing number of settings up and down the country are closing or expect to close due to financial difficulties exacerbated by the introduction of the 30 hours.

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The Ark nursery in West Sussex is closing in July

  • Emerging trend of settings closing due to 30 hours underfunding
  • 14 settings in Stockport are at risk of closure in the next 12 months
  • Axing of the Graduate Leader Fund ‘the final straw’ for one nursery

The National Day Nurseries Association told Nursery World it had seen a 47 per cent increase in member closures between September 2017 and May 2018 compared to the same period the previous year.

In Stockport alone, two nurseries are due to shut at the end of this term and an additional 14 settings have raised concern about their viability over the next 12 months.

Wendy Hartley, co-founder of voluntary network Stockport Pre-school Providers, said, ‘We’ve been battling with funding for a while, but it has accelerated in the last 18 months.

‘Last April [2017], we had no increase in funding. This April, the deprivation supplement has reduced from 31p to 11p. Because of this, we predicted that settings like Bright Beginnings were going to struggle [see case study].

‘Fourteen more settings have expressed concern about viability over the next 12 months. At least one setting in a deprived area, other than Bright Beginnings, is set to close at the end of the term.’

Elsewhere, the Ark Nursery in Bolney, West Sussex, is also closing at the end of term (see case study below).

Two nurseries in Kendal have shut and a further two are up for sale, according to Meadowview Nursery, which is based in the area and was also due to close until this month when an existing provider came forward to buy the business.

They join a number of other early years settings, including Anchors Nursery School in Hampshire and Fidgety Fingers in Essex, that have already closed because the 30 hours entitlement meant they would be unable to sustain their business.

For others, the 30 hours has been a contributory factor in their decision to close their setting. This was the case for Steve Taylor, owner of Winchcombe Farm Day Nursery, who closed the setting last December. It had been struggling financially after being downgraded by Ofsted.

There have also been several local newspaper stories reporting the closure of nurseries and pre-schools in their area since September because of financial difficulties. Among them are Busy Bees Nursery in Blackpool, Quorn Grange Day Nursery in Leicestershire and Little People Pre-School in Poole.

Neil Leitch, chief executive of the Pre-school Learning Alliance, said he was not surprised to hear that so many settings are closing. ‘Sadly, we now hear from several providers every week who feel they have no option but to close – and while we always endeavour to offer our members expert resources and specialist legal advice, we worry things will only get worse unless the Government is prepared to take the sector’s concerns about funding seriously.’

Cash shortfall

He added, ‘Providers have repeatedly warned how current funding levels are unsustainable and risk leaving many struggling to balance the books – but to date, every warning has been met with inaction from ministers who would prefer to dismiss them as outliers rather than consider the simple truth that the underfunding of their flagship childcare policy is forcing quality providers out of business. It’s absolutely vital that the Government starts listening to providers and addressing the valid concerns they are raising if we are going to have any chance of tackling this worrying trend.’

NDNA chief executive Purnima Tanuku said, ‘This policy has doubled the shortfall in funding that nurseries experience and some just can’t absorb these huge losses. Our own figures bear this out with more than 40 per cent more nurseries closing this year compared with the same period last year.

‘Business costs have increased significantly – especially staffing costs, which have the most impact on a nursery business – but hourly funding rates for the majority of providers have remained static. The equation does not add up and sadly there will be more casualties.’

A DfE spokesperson said, ‘We are supporting as many families as possible with access to high-quality, affordable childcare, and have fulfilled our promise to double the free childcare offer available to working parents to 30 hours a week, saving them up to £5,000 a year per child.

‘By 2020 we will be spending a record amount on childcare to support the delivery of our childcare offers – around £6bn a year.

‘We have increased the national average total hourly funding rate to local authorities for three- and four-year-olds from £4.56 to £4.94.

‘The number of childcare places available has remained stable since 2012, and thanks to our reforms, 294,000 children benefited from a 30 hours place last term.’

Case study: Bright Beginnings Children’s Nursery, Stockport

The Outstanding nursery in an area of deprivation and social exclusion is set to close at the end of the summer because it is unable to operate on the money it receives for the funded hours.

Open for ten years, the social enterprise, which provides places for 55 children and employs 15 staff, will close on 24 August.

Its chairman Kevin Jebson says the setting has been crippled by a drop in the amount of funding it receives to deliver the 15 and 30 hours, and increases to the national minimum wage, pension contributions, rent and business rates.

He explains, ‘Over the past 18 months the directors have been challenged by providing the Government’s flagship childcare policy of “funded” or “free” hours. This saw a massive decrease in the amount we received via Stockport Council. It became clear we could not operate a sustainable business on this level of funding.

‘We were left with no option when in April the figure was reduced again. On top of this we have been faced with a 4.4 per cent increase in national living wage, a 1 per cent increase in pension contributions, an increase in rent, a hike in our business rates and a 3 per cent increase in other costs.

‘The reality is we cannot provide Ofsted Outstanding nursery care on the funding being provided.

‘Adswood is an area that needs high-quality childcare and the closure of Bright Beginnings is a great loss to the area. For many children who attend the setting, it is the only chance they will have to get a hot meal or play outside.’

The Ark Nursery, Bolney

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Jenny Payne, owner of the Ark Nursery: 'We are closing because of a decade of underfunding'

The sessional, term-time-only setting in Bolney, West Sussex, which is registered for 26 children aged two to four, is closing on 20 July.

Owner Jenny Payne told Nursery World, ‘We are closing because of a decade of underfunding.

‘Pensions have come in, the national minimum wage has increased, insurance has gone up and training costs, while funding has not risen anywhere near the same amount. Until last April, we received £3.77 per hour, per three- and four-year-old. We now receive £4.42 and £5.10 for twos, but the real cost of a place is £6 per hour.

‘Numbers have also dropped at the setting as there is now more provision available than when I took over 20 years ago, there hasn’t been any house-building in the area and there is a pressure to get children into school earlier.

‘The final straw was the abolishment of the Graduate Leader Fund. When our deputy, a qualified teacher, came to us ten years ago, she said she wanted to specialise in early years. We were able to get a large sum for her to do the Early Years Profess-ional Status. We continued to receive the funding until 2016, when I was suddenly told the DfE weren’t going to do it any more. I had to get a bank overdraft.

‘I’ve been very flexible, extending hours and when parents can drop off and pick up. We’ve tapped into any grant money we could get. Parents provide snacks on a rotating basis and packed lunches.

‘I don’t think the reality that the setting is closing will set in until the last day, when we plan to hold a party with current and past children and their families.’

She added that she has secured a new job in the sector, while three other staff either no longer need to work or have decided to leave childcare. One member of staff is currently looking for a position.

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