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DfE research reveals “perfect storm” of challenges for providers

By Caroline Wadham 

New research, published by the Department for Education today, has revealed the extent of pressures facing nurseries, pre-school and childminders in England.

The series of reports covers the impact of Covid-19 on the early years sector, provider finances and workforce recruitment and retention.

Low funding and rising costs

The reports state that setting managers “identified low funding as one of the main causes of instability in their settings”.

In total, 54% of nurseries and pre-schools and 49% of childminders report that their overall costs have notably increased since before Covid-19.

Overall, 34% of nurseries and pre-schools have been using business contingency reserves to manage their setting finances, while 24% have used savings previously set aside for future improvements and 49% of childminders have had to use their personal savings to manage setting costs.

In addition, only 39% of private providers and 21% of voluntary providers recorded a financial surplus in 2021. For childminders this fell to just 19%.

Setting managers also raised concerns that the relaxation of ratios would be an “unsuitable approach that could impact on the quality of childcare provision and increase workload and dissatisfaction among staff”.

Retention and Recruitment

A majority (72%) of private and voluntary nurseries and pre-schools have lost staff since the start of the pandemic, with 40% recording a staff turnover rate of more than 25%. Nearly half (47%) of these settings said the main reason for staff leaving is due to better pay, while 60% say that those leaving have exited the sector completely.

“Perfect storm”

Neil Leitch, chief executive of the Alliance, commented: “As these reports show, there has never been a more difficult time to run, manage or work in an early years settings.

“A combination of inadequate government funding, severe staffing challenges and the ongoing impact of the pandemic has created a perfect storm of challenges-one that has left far too many settings on the brink of permanent closure.

“For years, we have warned the government that without urgent action, the early years sector would be left in crisis-and now, here we are. And yet, rather than look at what steps it could take to actually support the early years, the government is wasting time looking at deregulation and ratio relaxation, despite the fact that this will worsen the recruitment and retention crisis, lower quality and made absolutely no difference to costs for parents.

“What we need is a clear, comprehensive strategy for the early years sector, one that prioritises the provision of quality early years education alongside affordable childcare for parents, and recognises that

substantial investment is needed to make any of this possible. Anything less is just a waste of all our time.”

Find out more

The three reports can be read below: