Too many nurseries in poor areas are loss-making

Too many nurseries are struggling to survive with more than a third (38 per cent) of early years settings in deprived areas operating at a loss.

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With a £662 million funding gap facing the early years sector, the findings were revealed in Ceeda’s 'About EY annual report 2019'.

Early years research group Ceeda found the withdrawal of council-run nurseries, dramatic falls in Early Years Pupil Premium spend and decreases in the take up of disadvantaged two-years-olds places had contributed to nurseries struggling to cover their costs in deprived areas.

Spend on places for disadvantaged two-year-olds has dropped by almost a fifth since 2014/15 and spend on the Early Years Pupil Premium has fallen by 40 per cent since 2015/16.

The Ceeda report stated: ‘The safety net of council-run provision is disintegrating, local authorities have withdrawn 226 nurseries from the early years register, of which 71 per cent were based in deprived communities.

‘Schools deliver just 14 per cent of disadvantaged 2 year old places, as settings struggle with thefunding freeze, who will be left to pick up the pieces in areas where PVI supply fails?’ More affluent neighbourhoods are also finding running a nursery business tough, with almost a quarter (23 per cent) of settings also in the red.

Small, single-site nursery operators are not achieving the economies of scale possible in larger operations with just over a half (55 per cent) making a profit compared to 72 per cent of settings in groups of six nurseries or more.

Since September 2017, most working parents in England have been entitled to a scheme offering 30 hours of free care for children aged three to four during term time.

Purnima Tanuku, chief executive of National Day Nurseries Association (NDNA) said: “The findings of this report echo all the research we have been doing.

“The government just seems to be ignoring these warnings.

“Each closure causes distress and upheaval for children, families, staff and their communities."

After monitoring nursery closure figures since the introduction of 30 hours in September 2017, the NDNA has found them to be increasing.

“This is a crisis and must be addressed immediately with adequate investment. Offering funded hours to children of working parents is hampering measures to improve social mobility in England.

"And yet these are the families this policy was brought in to support. It makes no sense at all.”

A survey of early years providers has found that most settings are struggling with their finances as a result of the 30-hours funded childcare offer.

In separate research Campaign group Pregnant then Screwed surveyed 266 childcare providers about the 30 hours offer.

Some 96 per cent said funding for the 30-hours offer does not cover their costs and 22 per cent said that they do not think they will still be open in a year’s time.

Joeli Brearly, founder of Pregnant then Screwed, said: “We need the Government to create a childcare system that works for everyone, so that nurseries can stay open and provide quality care, and parents can go to work without facing the burden of high cost childcare.”

Neil Leitch, chief executive of the Early Years Alliance, added: "Years of inadequate government funding have left thousands of nurseries, pre-schools and childminders struggling to keep their heads above water, and many have been forced to charge parents higher fees to try to bridge an ever-increasing funding gap.

"If government truly wants to support families with the cost of childcare, it simply must invest what is needed into the sector. Anything less will simply exacerbate the existing problems."