Childcare at risk of collapse as rising costs crush short-staffed nurseries, government warned

By ITV News Content Producer Talia Shadwell

Nurseries are facing the threat of mass closures as rising energy costs pile pressure on a sector already strained by a recruitment crisis, the government is being warned.

The industry says childcare services — upon which parents up and down the country rely so they can go to work— are on the “brink of collapse”.

One pre-school's management says it is doing everything it can to avoid that “tough conversation", but fears energy bills this winter will leave it facing perilous gaps.

The police officers, nurses and teachers who send their children to the rural Sussex pre-school work the kinds of jobs that would leave them “lost” if the centre was forced to close, Birdham Pre-School managing committee chair Josie Henry told ITV News.

She has warned that a failure to value early years teachers has sparked a mass exodus from a profession, where workers are leaving for better paid jobs at supermarkets.

The early years sector is pleading for immediate reform to stop the mounting costs shouldered by nurseries and pre-schools reaching critical mass, throwing parents' delicately balanced childcare arrangements into crisis.

Early years sector advocates told ITV News they fear unless the government takes action soon, the industry will soon be in serious trouble.

“In the next couple of months we will be going to be having a very serious conversation," Ms Henry said.

"Because if the energy cost increases by too much then a conversation about potential closure will be imminent.

"We are trying everything possible to stop that happening.”

She supports more free childcare for families, but said the government needs to reform the way it funds care providers to patch a shortfall. She also wants pay standards similar to schoolteachers' introduced to support early years employers to attract and retain staff.

The wider sector heaps blame on a recruitment crisis, rising energy and property leasing costs, long-held concerns about the way 'free' childcare places are funded by the government, and accusations of “unfair” business rates and VAT burdens.

Many nurseries have been raising fees to gird themselves from the risk of business failure, and say they have no choice to pass those costs on to already struggling families.

According to the National Day Nurseries Association (NDNA), which has been tracking nursery closures in the UK, there has been a 65% uplift in closures in the 2022 summer term, compared to the same period last year.

More than one-third of closures were in the country’s most deprived boroughs, it said.

The NDNA has been sounding the alarm, labelling the closures “disastrous” and only likely to sharpen as energy costs increase and inflation is predicted to spike in the new year.

The NDNA in recent months has issued a warning to the government that this academic year could bring record-breaking numbers of nursery closures - “leading to a catastrophic reduction in places” and driving already soaring demand.

It said the key factors driving the closures included: underfunding, “unfair” business rates, and rising costs such as energy bills.

The NDNA expected the national minimum wages to rise again, while childcare workers impacted by the rising cost of living left the sector for better paid jobs.

But nurseries, especially those run as small businesses, were struggling to close that gap, its recent warnings have said.

The NDNA's reports say the problem began when the government offered 30 hours “free” childcare to parents, without actually fully funding providers to cover the full costs of providing that service - leaving nurseries to pick up the shortfall.

Pressure is mounting on the new Sunak government to reform both the childcare and parental leave systems.

The advocacy group Pregnant Then Screwed (PTS) will hold a nationwide protest in 11 major centres around the UK this weekend.

More than 12,000 are already signed up for the March of the Mummies on Saturday, 29 October, which is expected to attract at least 6,000 demonstrators in London alone.

Children’s Commissioner Dame Rachel de Souza this month released a report calling for urgent modernisation of the parental leave system, in part by relieving the pressures on childcare centres.

She has suggested the school day could be extended to reflect parents’ working patterns, so they could be cared for by childminders on school premises after hours.

Dame Rachel made a series of recommendations to level the playing field, emphasising that parents of children from disadvantaged and minority ethnic backgrounds were less likely to be able to afford to take up private nursery places.

The report’s recommendations also included: better pay for child educators, the creation of local childminding agencies - run directly by a local authority, a multi-academy trust, a group of school or the local Family Hub - who could fill pick-up and drop-off gaps to better reflect parents’ working patterns.

The free childcare provision should be overhauled, the report said, as it leaves families exposed to the highest costs when a child turns two, in the gap before the free 30-hour provision begins.

Her report also recognised many fathers were desperate to have more involvement in their child’s early years, with some dads' pandemic experience of working from home only sharpening their hunger for greater flexibility over parental leave.

Reports suggesting the now ousted Truss government was considering changing nursery ratios to free up spaces, by allowing more children to be cared for by each member of staff, has prompted a backlash in recent weeks.

'No' to nursery ratio changesCoram’s head of family and childcare, Megan Jarvie, told ITV News weakening ratios was the wrong type of solution.

“We are disappointed that amid the ongoing cost of living crisis, and off the back of the pandemic which has severely impacted children's development, the government has chosen to focus its efforts on a measure that is unlikely to reduce costs for families yet will reduce quality," she said.

“From childcare providers we know that operating above ratios is seen to deliver a range of quality benefits, including more time for planning, managing incidents, as well as raising the enthusiasm of the staff, and the quality of their engagement with children. And parents care about ratios too, particularly for children with special educational needs or disabilities.

“Childcare remains very expensive for parents, locking many out of work, and provision is too often variable or insufficient. At a time when the attainment gap between disadvantaged children and their more affluent peers is widening, it’s absolutely vital that we focus on making sure that childcare is affordable and of the highest quality. Reducing ratios is unlikely to help with this and is an unhelpful distraction.

“Whilst we welcome the government’s drive for more parents to take up tax-free childcare, more could be done to ease the burden by re-allocating the billions of pounds in underspend from the scheme to low-income families."

Why are childcare workers leaving the profession?

The TUC, which is among several unions that represent childcare workers, has labelled median wages of £9.50 an hour “poverty pay”, and is campaigned for a nationwide minimum of £10 am hour.

According to the government’s figures the average wage for other employees in the UK is £13.57 an hour.In the informal childcare sector, such as nannying, people are often paid even less - and the majority of the early years workforce - around 90% - is made up of women, the TUC's Nikki Pound points out.

Even before the pandemic, research by the education sector raised alarm bells over a coming exodus of early years workers.

This was compounded by an ageing workforce crisis, as senior care workers said they planned to retire while the sector struggled to backfill with workers willing to take on low-paid jobs against a backdrop of increasing everyday costs.

Childcare staff face a struggle to get more than part-time hours, and are often offered-zero hours contracts, Ms Pound said.

“We want childcare workers to be paid well because the work they are doing is so valuable," she said. "They need to have progression opportunities and to be valued.”The TUC is working on trying to get better pay and provisions, and want to see a minimum wage floor for childcare workers.

A 2021 informal survey of childcare workers found many were missing out on key employment provisions like sick pay, often due to their employment being made up of part-time or informal hours.

The workers told the union they took unpaid leave, or felt they had no choice but to go into work alongside children while sick.

The TUC “absolutely” fears childcare sector collapse and is “disappointed" by the then-Truss government’s touted policy ideas to weaken ratios, Ms Pound said.

“It’s not going to do anything for an overworked, overstretched workforce that are leaving in droves.”

She said the current offer is “unattractive and unstable” for parents, pointing to charity Coram's analysis, which found there is not a single area of England where the average cost of childcare fulltime works out to under £14,000 annually.

Asked about how the government plans to tackle rising childcare costs and nursery closures, a Department for Education spokesperson told ITV News: "We have spent more than £4 billion in each of the past five years to support families with the cost of childcare and thousands of parents are benefitting from government childcare support.

"Improving the cost, choice and availability of childcare for working parents is a key priority for this government. In July we set out our initial reform plans, including launching a consultation on staff to child ratios.

“We are exploring a wide range of options to make childcare more accessible and affordable for parents, but no decisions have been made.”

'They get paid more to work at supermarkets'

Ms Henry says she left a senior nursery management job some years ago, because she was being paid a rate lower than the current minimum wage.

She thinks the job is not respected – despite many staff having university degrees, and all must be trained in standards like first aid, food hygiene, and safeguarding and pass checks to look after children.

She says childcare workers should be rebranded 'early years practitioners', and their pay and professional standards brought into line with schoolteachers'.

“I say 'practitioners' because we’re not babysitters, we’re not just playing with kids at work.

"We‘re carers for other people’s children and there’s a lot of paperwork too, believe or not... we have to understand children, know where they are at – where their parents are at, where they are in their learning.“

Asked where the staff leaving the workforce in droves are going, Ms Henry said: “It’s cleaning, it’s care work, going to supermarkets.”

One new early years recruit had been so excited to finish her training.

But she soon found she could not survive on early years workforce wages, so she found higher paid work elsewhere, Ms Henry said.

“In the last few years she found she couldn’t afford to live off it, couldn’t afford to work or even get to work. She left and is working in a supermarket where she’s earning double for less hours.

"She has given up her dream job.”

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