Nurseries to lose £247m due to funding changes

Research suggests that the early years sector faces losing a quarter of a billion pounds over the spring term due to the withdrawal of vital government funding.

Analysis of a recent survey carried out by the Early years Alliance and Ceeda shows that 65 per cent of nurseries and pre-schools and 42 per cent of childminders reported having fewer children taking up funded childcare places this January, compared to the same period in 2020.

The government’s recent decision to base funding for funded early years places for two-, three- and four-year-olds on the number of children currently registered at early years settings during the spring term, rather than on pre-pandemic attendance levels as it in 2020, means that in the spring term:  group-based providers with lower headcounts will lose an estimated average of £13,390 funding; and childminders with lower headcounts will lose an estimated average of £2,485 funding.

This means that the sector is currently facing total losses of £247 million over this period.

Neil Leitch, chief executive of the Alliance, said: "Nurseries, pre-schools and childminders have been on the frontline throughout this pandemic. It beggars belief, therefore, that at a time when early years providers need the most help to ensure that they can remain sustainable, the government has inexplicably chosen to reduce the level of financial support it is willing to offer.

“With the sector facing spring term funding losses of nearly a quarter of a billion pounds, it is absolutely critical that the government reverts back to basing early years funding on pre-pandemic attendance levels, as it did during the summer and autumn term last year. We urge the Treasury to use this week’s Budget to commit to providing the support that our vital sector needs during this incredibly difficult period, so that settings can continue to deliver quality education and care, both now and in the long term.”

Tulip Siddiq, Labour’s Shadow Minister for Children and Early Years, commented: “Nurseries and childminders have provided an incredible service remaining open to all children in lockdown, yet the government is rewarding them with funding changes that could force a quarter of all providers to close their doors for good.

“Early years providers need targeted support to survive this crisis, not to have the rug pulled from under their feet at the height of the pandemic. There is a real danger that the childcare sector will collapse unless the government rethinks these funding changes, with young children, working parents and our economy paying the price.”