Childcare providers slam Chancellor’s announcement on funding

The Early Years Alliance has called the announcement of more funding for childcare ‘insulting’ as a survey shows the growing financial troubles facing the sector.

Small child playing with brightly coloured bricks on the floor in a childcare setting


Childcare campaigners have labelled the Chancellor’s announcement of extra funding for providers as “insulting” as they publish a report showing a quarter may go under if Covid-related support is not increased.

The Chancellor announced £44 million in funding for early years education in 2021-22 “to increase the hourly rate paid to childcare providers for the government’s free hours offers”. This compares with an extra £2.2bn for schools next year. Even before the pandemic, the Early Years Alliance estimated that it was facing a £662m shortfall in funding from the Government for the 30 hours free childcare for three and four year olds and disadvantaged two year olds.

Neil Leitch, chief executive of the Early Years Alliance, said: “While we welcome any new support for the early years sector, at a time when so many early years providers are on the brink of closure, it is frankly insulting that the government is continuing to tinker at the edges rather than committing to properly funding early years provision in this country.

“With the Treasury today committing to billions of pounds in spending on schools, it has to be asked: is this the best that we can do for our young children?…

“The government had an opportunity today to show that it values early education and it failed to take it. For the sake of providers, children and families across the country, we urge them to rethink this decision, and commit to providing the significant investment that the sector actually needs.”

Nursery and childcare closures

The announcement comes as the Early Years Alliance issued a report showing a quarter of nurseries and childminders could close within the next six months when the government cuts ‘free childcare’ funding to the sector from January 2021. The report came before the announcement of extra funding.

Throughout the pandemic, the government has continued to fund ‘free’ childcare places on the 15/30 hours scheme at pre-pandemic occupancy levels. However, it recently confirmed that this level of funding will not continue into 2021. Children and families minister Vicky Ford recently told Parliament that local authorities’ funding to childcare providers would return to “‘funding following the child’ from 1 January 2021.

A new survey of more than 2,000 childcare providers in England conducted by the Early Years Alliance found that this decision could leave a quarter of nurseries and childminders unable to survive beyond the end of May.

Previous Early Years Alliance research found childcare providers are currently experiencing a  21% fall in occupancy levels compared to this time last year with parents keeping their children at home, being furloughed or unable to pay fees as a result of Covid.

Temporary decrease in occupancy

Joeli Brearley, CEO and Founder Pregnant Then Screwed which is backing the survey and the Save Our Nurseries campaign, says: ‘’This is a temporary decrease in occupancy and we expect these rates to rise again once the vaccine has been administered. Obviously this decrease in occupancy has had a significant impact on the income nurseries can generate, yet simultaneously their overheads have only decreased marginally. The Government agreed to continue funding nurseries and childminders at the same level they had been doing before the pandemic hit and that helped hundreds of childcare facilities ride the financial storm, but now they want to reduce that funding. To do this now will be the death-knell to the childcare sector.’’

She added: “Good quality, affordable childcare is the first line of defence against poverty and health inequalities for children. This cut to funding will have a disproportionately negative impact on nurseries in areas of deprivation, thereby decreasing the attainment gap. Childcare is not a cost, it is an investment, with studies showing that for every £1 invested in childcare there is a £3 return.”

The Early Years Alliance has urged the government to commit to extending current early entitlement funding support until at least the end of the spring term.

An earlier survey by the Alliance, released in October, revealed that one in six nurseries and childminders could close as soon as Christmas without additional support. Before the pandemic, 11% of childcare providers were running at a significant loss.

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