Government move angers childcare providers

The Government has announced that it will revert to funding based on actual attendance at nurseries in January which providers say could mean the difference between them being able to stay open or not.

reviews of policy following the general election result.


Nurseries are angry after a government report said that they will have to revert to funding being allocated based on the actual number of children attending in the new year.

Nurseries argue that uncertainty and anxiety over Covid has led to many parents taking their children out of childcare, affecting their financial stability.

Over the course of the pandemic, the Government has continued to pay early years funding based on pre-Covid enrollment. The report says: “In the spring term 2021, local authorities’ funding to providers should return to the normal approach of funding on the number of entitlement hours delivered.

It says  additional support for local authorities may be offered on a case-by-case basis and advises nurseries to use the furlough scheme, although they can only furlough staff based on the proportion of their funding that doesn’t come from Government, such as the subsidy for three and four year olds and disadvantaged two year olds.

The news comes as a Department for Education and the Government Social Research Service report of more than 4,000 early years providers carried out in September and October 2020 found that, of those who were open at the time of the survey, just 42% of nurseries and pre-schools and 51% of childminders believed it would be financially sustainable to continue to run their childcare provision for another year or longer. It also found that, on average, open nurseries and pre-schools were losing more than £7,000 per month in private income and open childminders around £700 per month.

Neil Leitch, Early Years Alliance chief executive, said: “It is inconceivable that at a time when the government’s own figures show ever more childcare providers are barely keeping their heads above water, it would decide to return to funding early years places based on actual attendance. How exactly does the government expect settings to remain open when their bills come in, but their funding does not?

“Providing ‘some’ support on a case-by-case basis simply is not good enough. We know that nurseries, pre-schools and childminders are still seeing significant reductions in the demand for places, which is having a hugely detrimental impact on their income. With the government admitting just last week that it has been overestimating childcare attendance – and its own report today which showed private fees have fallen drastically – it is simply unbelievable that they have taken this decision, and worse still, given providers so little notice of a potentially substantial fall in income.”

He added: “With early years settings also experiencing other huge drains on their finances, such as the costs of enhanced cleaning, PPE and other supplies, and the impact of an increased need for staff cover, this is likely to be the final straw for many. The way the government has treated the early years sector throughout this crisis has been utterly shameful. The government must urgently reconsider this decision – or risk causing the closure of thousands of early years providers over the coming months.”

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