In Depth

Why nurseries in England are struggling to stay afloat

Education charity warns that almost one in five childcare providers in poorest areas are facing closure

Children playing in a nursery

A shortfall in early education funding is having profound negative effects on poorer families in England, a charity is warning. 

The Early Years Alliance (EYA) says a survey of childcare providers in the most deprived parts of the country found that 17% believe they will have to close within the next 12 months. Thousands of providers have already shut, and others are charging parents extra in a bid to stay afloat. 

EYA chief executive Neil Leitch said: “How much bigger does the early years funding shortfall have to grow before the Government acts? Thousands of providers have closed, many more are charging for things that were previously free and now we see the impact this is likely to have on the poorest children in the country.”

Why are nurseries struggling? 

According to independent research agency Ceeda, the early years funding shortfall has risen by almost £50m over the past year to £662m, reports Sky News

As the BBC notes, since 2017 most working parents in England have been entitled to 30 hours of free care a week for children aged three and four during term time. The Government pays a national average of £4.98 per hour to local authorities for each child’s nursery place, but childcare providers have said this does not cover their costs.

How are nurseries coping with the shortfall?

The EYA says some nurseries are cutting costs by lowering the quality of the food given to children. And of 350 nurseries and childminders surveyed, 43% had been forced to cut back on learning resources. Others have started charging for extras that used to be free.

“Many pass on the shortfall to parents and one in five said they now required private hours to be taken alongside the Government’s funded childcare, making it even harder for disadvantaged families to afford,” says Sky News.

Why is it worse in the poorest areas?

In more well-off parts of the country, nurseries can charge more – so the inference is that wealthier parents are filling the funding gap here. In poorer areas, parents are not able to pay the extra, leaving nurseries struggling to stay in business.

Paula Williams, who runs a nursery in Bradford, told the BBC that her centre may soon be forced to close unless government funding increases. She said: “Our funding went down yet our costs have all increased because national living and minimum wage is going up year on year, and also we had to start paying pensions for all staff.

“Further forward, it’s getting tighter because next year the minimum wage will go up again and our funding is stagnant, it’s not increasing.”

What does the Government say?

The Department for Education told the BBC that it spends £3.5bn a year on early education. The Government provides “a significant package of childcare to parents and carers”, allocating money to local authorities “fairly and transparently”, a department spokesperson said.

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