'Fundamental service' at risk as childcare providers face financial struggle
Video report by ITV News Correspondent Dan Rivers
Many childcare providers face big financial problems as a result of the coronavirus crisis, putting one in four at risk of closure, a new report warns.
The loss of income from parent-paid fees since March means that many providers face a tough time keeping their doors open.
The research found a total loss of income from parent fees would have put one in four private-sector nurseries at risk of running a significant deficit during the lockdown, with less than £4 of income for every £5 of costs.
While childcare settings were allowed to open to all children from the start of June, by the start of the summer holidays demand for childcare places remained 70% below pre-crisis levels.
It warned there was a risk that some childcare providers will close, creating a shortage of places once demand returns.
Cheryl Hadland from Tops Days Nursery's told ITV News they survived the pandemic but before it even started they were already struggling financially.
While father Fode Bollani-Kaba told ITV news: "It's not really financially viable for either party to be honest and childcare is such a fundamental service."
Christine Farquharson, senior research economist at the IFS, said: “Childcare closures during the lockdown saw providers’ incomes take a big hit.
“While government support cushioned the blow, especially for settings mostly reliant on public income, we estimate that half of childcare providers were at risk of earning less than £4 of income for every £5 of cost during the lockdown if they took in no fees from parents.
“The lockdown hit providers of all sizes and in all areas, but childminders – who entered the crisis with weaker finances on average – were more exposed than other types of settings.”
Katherine Endcacott-Foster told ITV News the nursery she used to send her children had already closed because of the pandemic and she was now on a three-month waiting list for another.
She said: "I'm in a no-win situation, I have to keep my children home."
She said she was happy looking after them but worried she couldn't provide the educational challenge needed to help their development.
The research was carried out by the Institute for Fiscal Studies (IFS), the University of Birmingham, Frontier Economics, Coram Family and Childcare, and the University of Surrey, indicated the virus crisis had exacerbated issues within the childcare sector.
Tulip Siddiq, shadow minister for children and early years, said: “Coronavirus has delivered a hammer blow to a childcare sector that was already on its knees after years of underfunding by the government."
Adding: "This government’s incompetence has left us on the verge of losing many thousands of childcare places – an outcome that would be devastating for many working families and the children whose life chances are shaped by early education.”
A Department for Education spokesman said: “Nurseries, preschools and childminders are integral to this country’s recovery from the coronavirus pandemic.
They added: “That’s why we set out from the start that we would continue providing councils with funding for free childcare entitlements for two, three and four-year-olds, even if settings were closed, which the IFS itself acknowledges has helped protect the sector.
“Early years settings have received significant financial support over the past months and will benefit from a planned £3.6 billion funding package in 2020/21 for free early education and childcare places.
“We are providing extra stability and reassurance to nurseries and childminders that are open by ‘block-buying’ childcare places for the rest of this year at the level we would have funded before coronavirus – regardless of how many children are attending.”