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A quarter of childcare providers fear closure within a year

By Rachel Lawler
A quarter of childcare providers believe that they are likely to close within the next year, according to a new survey conducted by the Alliance.
Three quarters of early years providers said that the government has not provided enough support for the sector in the coronavirus crisis.

Coronavirus Job Retention Scheme
More than 3,000 early years providers responded to the survey, which also highlighted key areas of concern such as the coronavirus job retention scheme.

75% of respondents said that they had thought they would be able to access the scheme fully while still receiving early years funding until the Department for Education published updated guidance on 17 April clarifying that there would be limitations on this.

71% had already furloughed staff, based on guidance published on 24 March which stated that providers could benefit from both schemes.

This updated guidance could have a potentially huge impact on the sector, with 47% of respondents saying that they may now need to make staff redundant and 37% saying that they would retract offers to top up staff wages to 100%.

21% of providers said that they would now need to retract offers to waive or reduce parent fees.

Small Business Grants
The survey also highlighted issues with the government’s Small Business Grant scheme as many providers operate from rented premises or buildings that don’t attract rate relief.

Settings operating from a premises with a rateable value over £15,000 are also unable to benefit from the scheme. Meanwhile, retail, hospitality and leisure businesses with a value between £15,000 and £51,000 are able to claim support grants of up to £25,000.

The survey also highlighted concerns for childminders, who are unable to access any financial support from the Self-employed Income Support Scheme until June.

Any childminders who have been operating for less than a year also reported concerns as they cannot access this support scheme at all.

Neil Leitch, chief executive of the Alliance, said: “These findings paint a truly worrying picture of a sector struggling to cope with the impact of the coronavirus outbreak, and not getting anywhere near the support needed to make it through this crisis.

“Many nurseries, pre-schools and childminders were already struggling financially long before the coronavirus outbreak hit as a result of years and years of severe underfunding – and while the government has taken some steps to support providers during this period, as the results of the survey show, they are simply not enough.

“The recent last-minute U-turn on the support that childcare settings can receive for furloughed staff in particular has had a hugely negative impact on the sector, and if not reversed, is likely to contribute to many avoidable redundancies and, in some cases, permanent closures.

“Add to this the number of providers that the survey revealed are falling through the gaps of existing schemes – such as settings unable to benefit from business support grants, and newly-registered childminders excluded from the Self-employed Income Support Scheme – and it’s clear that government support for the sector is severely lacking.

“Like schools, early years settings are an essential part of our social infrastructure, and will play a vital role in supporting parents to be able to return to work as the current lockdown situation is eased. We know that these have been an expensive few months for the Treasury, and that ministers may not see the value of committing to greater financial support for a sector that they have long overlooked and undervalued, but the reality is that abandoning the early years sector at this critical time will cause untold damage to this country’s economy in the long term.

“The government must now accept that it needs to do much more to support early years providers in this country – otherwise, we may not have a functional childcare sector when this crisis is, eventually, over.”

Find out more
Alliance slams U-turn on furlough scheme

Business Advice page: FAQs for providers

Blog: Quick Q and A: Job Retention Scheme and early years entitlement funding