The early years sector is warning of ‘chaos’ and ‘mass closures’ as new data reveals the huge scale of financial losses facing it.

According to data analysts Ceeda, as of 8 June, England’s early years providers have been operating on average at 37% of their capacity since early June when they were able to re-open. This is compared to 77% in the spring of 2019 The Early Years Alliance stated that continuing at this rate will cause significant financial losses and many parents could struggle to access childcare places.

Both are calling on urgent Government intervention to minimise the damage.

If the take-up of childcare places continued at this level on average over the next 12 months, providers would face average losses of:

• £3.63 per funded two-year-old child per hour (a funding shortfall of 68%), and
• £2.53 per funded three- and four-year-old child per hour (a funding shortfall of 55%).

The modelling also shows that even if more parents start taking up childcare places, providers will still face significant losses. According to Ceeda, over the next 12 months:

• an average occupancy level of 45% would mean that a childcare provider would face average hourly losses of:
  • £3.06 per funded two-year-old (a shortfall of 57%)
  • £1.96 per funded three- and four-year-old (a shortfall of 43%)

• an average occupancy level of 55% would mean that a childcare provider would face average hourly losses of:
  • £2.59 per funded two-year-old (a shortfall of 48%)
  • £1.48 per funded three- and four-year-old (a shortfall of 32%).
• an average occupancy level of 65% would mean that a childcare provider would face average hourly losses of:
  • £2.26 per funded two-year-old (a shortfall of 42%)
  • £1.15 per funded three- and four-year-old (a shortfall of 25%)

In a new report, The Forgotten Sector, published today, the Early Years Alliance has highlighted the various areas in which the early years has been overlooked during the pandemic, and called on the government to:

• extend the financial support with costs such as extra cleaning being provided to schools to early years settings;
• extend businesses grants currently available to retail, hospital and leisure businesses to childcare providers;
• and extend the £1 billion ‘Covid-19’ catch-up fund for schools to the early years sector, as was initially announced.

The Forgotten Sector report is available here: bit.ly/forgottenEY

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

‘The government says that it has done enough to support childcare providers during the coronavirus crisis, but these figures from Ceeda show that this couldn’t be further from the truth.

‘As we have long warned would be the case, the joint pressures of inadequate government funding and reduced parental demand for places means that many nurseries, pre-schools and childminders are losing money on every childcare place they offer. This is simply not sustainable.

‘Even in areas where parental demand for childcare places remains high, providers are currently restricted on how many children they are able to care for under government guidance, which is going to place even more financial pressure on them over the coming months.

‘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.’

Jo Verrill, managing director of Ceeda, said:

‘The coronavirus pandemic has delivered a powerful reminder of the importance of early education and childcare in all its facets, from the base need to keep vulnerable children safe from immediate harm, to giving every child and adult the opportunity to reach their full potential in education and work.

‘There is much rhetoric on the importance of a child’s early years. Now more than ever, this must be matched by investment, if we are to protect the country’s vital early years infrastructure.’