CMA investigation will focus on childcare providers among other sectors

The Competition and Markets Authority has pointed to the nursery and childcare sector as one of their areas of concern.

In a new investigation of cancellation and refund practices, the CMA highlighted three sectors of concern:

  • Nurseries and childcare.
  • Wedding and private events.
  • Holiday accommodation.

Commenting on this, Neil Leitch, chief executive of the Early Years Alliance, said:

‘The government has asked that childcare providers are ‘reasonable and balanced in their dealings with parents’ during the coronavirus outbreak, and we are proud to see that this has been the approach taken by the vast majority of nurseries, pre-schools and childminders to date. We know that many early years providers are waiving parent fees during this crisis regardless of the terms of their parental contracts, and despite the negative financial impact this is likely to have on their settings.

‘Any instances of settings taking an unreasonable approach to parental fees would be likely to represent a tiny minority of the sector as a whole. What’s more, it is important that the CMA takes into account the fact that, unlike the holiday and wedding industries, the childcare sector is heavily dependent on government funding, and this funding has been inadequate for years. This has put a huge pressure on providers trying to remain sustainable, and especially during this incredibly challenging period.

‘It is vital that any review of childcare practices takes these factors into consideration, and the Alliance would be very happy to support the CMA to gain a full and comprehensive understanding of these issues to ensure that the upcoming investigation is balanced and well-informed.’

 

Purnima Tanuku OBE, chief executive of NDNA, stated:

‘Nurseries are being put between a rock and a hard place during this crisis. They are being asked to remain open and run at a loss to provide emergency childcare, while those who can’t open still face staffing and other costs which the Governments support doesn’t fully cover.

‘As a result of a lack of insurance cover, delays to Government support schemes and chronic underfunding of childcare places we know that some nurseries have asked parents for contributions to keep their businesses afloat.

‘Nurseries as consumers have their own concerns especially about how insurance cover is working for them as this is leaving them exposed to losses. We have also raised concerns with the CMA previously about how Government funding is affecting the childcare market which is already pushing them to the brink. Before this crisis more than half were only breaking even or running at a loss.

‘If nurseries don’t have the income to cover their ongoing costs then they won’t be able to re-open when parents come to going back to work. If these measures – combined with a lack of Government support – force more nursery closures it will be the families and children who will suffer in the long term.’

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