New report shows scale of crisis in early years sector
By Rachel Lawler
New data from independent analyst Ceeda shows that early years providers are facing huge financial losses in the wake of the coronavirus crisis as a result of long-term underfunding and reduced demand for places.
Parents could soon see a reduction in the number of childcare places available as many pre-schools, nurseries and childminders could be forced to close as a result.
The Alliance's new report, The Forgotten Sector, details the impact of the outbreak and subsequent lack of government support on the early years sector in England.
The data from Ceeda shows that, as of 8 June, early years providers in England had an average occupancy rate of just 37%, compared to 77% in spring 2019.
If this continues for the next 12 months, providers will face average losses of £3.63 per hour for funded two-year-olds and £2.52 per hour for funded three- and four-year-olds.
If average occupancy levels increased slightly to 45% of the levels seen in spring 2019, providers would still face average losses of £3.06 per hour for funded two-year-olds and £1.96 per hour for funded three- and four-year-olds.
Even if average occupancy levels rose as high as 77% of the rate seen in spring 2019, providers would still be facing losses of £2.01 per hour for funded two-year-olds and 90p per hour for funded three- and four-year-olds.
A previous survey conducted by the Alliance found that 69% of providers were expecting to operate at a loss over the next six months, while 25% said that it is "likely" that they will be forced to close within the next 12 months.
A crunch point for the sector
Neil Leitch, chief executive of the Alliance, commented: “The fact is that the early years sector is at a crunch point, and unless urgent action is taken, we are going to see many, many more settings forced to close their doors over the coming months. This could mean chaos for parents – and particularly mothers – trying to access childcare in order to return to work at a time when the government is desperately trying to restart the economy.
“Ministers must now commit to providing the financial support that childcare providers need to remain sustainable throughout this crisis and beyond. Anything less puts the long-term viability of the sector as a whole at risk.”
The Alliance is calling on the government to commit to urgent transitional funding to support the childcare sector through this period. It has asked for funding to cover the costs of extra cleaning, for business grants to be extended to childcare providers and for the 'catch-up' funding offered to schools to be extended to the early years sector as was initially announced.
Risk to jobs
Councillor Judith Blake, chair of the Local Government Association's children and young people board, commented: "These problems will not go away anytime soon. Limits on the number of children who can attend settings and reduced demand from parents mean that settings simply cannot raise the income they usually would. This is already putting businesses, jobs and childcare places at risk.
“Having enough childcare places will be essential to support families and get the economy moving again, while supporting children’s development and getting them ready for school. It is therefore vital that the Government urgently provides additional funding at a national level to protect childcare providers and see them through this crisis.”
Meanwhile, shadow education secretary Rebecca Long-Bailey added: "Childcare will be necessary for families to get back to work and for the economy to recover but the sector is at risk of collapse with many providers facing huge losses.
“Labour has been calling for better financial support for childcare providers to cope with significantly reduced demand and additional safety costs in this crisis. The government needs to think long term and take action prevent catastrophic collapse now.’’
A copy of The Forgotten Sector has been sent to every MP in England.