CORONAVIRUS: A quarter of childcare providers fear permanent closure within the year, new Alliance survey reveals
One in four nurseries, pre-schools and childminders in England say it’s “unlikely” that they’ll still be operating in 12 months’ time as historic underfunding and a lack of adequate government support during the coronavirus crisis take their toll, a new survey from leading early years membership organisation the Early Years Alliance has revealed.
An online survey of more than 3000 childcare providers found that:
- 25% of respondents felt that it was 'somewhat unlikely' or 'very unlikely' that they would be operating in 12 months' time.
- 74% of respondents said that the government hasn’t provided enough support for early years providers during the coronavirus crisis.
A key area of concern for childcare providers was the recent government U-turn on the level of support nurseries, pre-schools, and childminders who employ assistants can access through the Coronavirus Job Retention Scheme.
Government guidance published on 24 March stated that childcare settings could benefit from both early entitlement funding and the Job Retention Scheme. However, on 17 April, the Department for Education published fresh guidance which placed new limitations on how much financial support providers receiving early entitlement funding could receive via the scheme.
The Department for Education has claimed the last-minute guidance was simply “further clarity” on the support that early years providers can access via the two schemes.
However, the Alliance’s survey found that, of those childcare providers who employ staff:
- 75% had thought they would be able to access the scheme in full alongside early entitlement funding prior to the new guidance being published on 17 April.
- 71% had already furloughed staff ahead of the new guidance being released, while a further 11% had informed staff they were going to be furloughed.
When asked what impact the new limitations on furlough funding would have:
- 47% said they may need to make staff redundant
- 37% said they may need to retract offers to top up staff wages to 100%
- 21% said they may need to retract offers to waive or reduce parent fees
Other key areas of concern highlighted by the survey included:
- Childcare settings who are unable to benefit from the government’s £10,000 Small Business Grant because they rent their premises or are based in premises that don’t attract rate relief.
- Childcare settings who are unable to benefit from the government’s Small Business Grant because their premises have a rateable value of more than £15,000 – despite the fact that retail, hospitality and leisure businesses whose premises have a rateable value of between £15,000 and £51,000 can claim support grants of £25,000.
- Childminders unable to receive any financial support from the Self-employed Income Support Scheme until June.
- Childminders who have operating for less than a year, and therefore cannot benefit from the Self-employed Income Support Scheme at all.
Commenting, Neil Leitch, chief executive of the Alliance, said:
“These findings paint a truly worrying picture of a sector struggling to cope with the impact of the coronavirus outbreak, and not getting anywhere near the support needed to make it through this crisis.
“Many nurseries, pre-schools and childminders were already struggling financially long before the coronavirus outbreak hit as a result of years and years of severe underfunding – and while the government has taken some steps to support providers during this period, as the results of the survey show, they are simply not enough.
“The recent last-minute U-turn on the support that childcare settings can receive for furloughed staff in particular has had a hugely negative impact on the sector, and if not reversed, is likely to contribute to many avoidable redundancies and, in some cases, permanent closures.
“Add to this the number of providers that the survey revealed are falling through the gaps of existing schemes – such as settings unable to benefit from business support grants, and newly-registered childminders excluded from the Self-employed Income Support Scheme – and it’s clear that government support for the sector is severely lacking.
“Like schools, early years settings are an essential part of our social infrastructure, and will play a vital role in supporting parents to be able to return to work as the current lockdown situation is eased. We know that these have been an expensive few months for the Treasury, and that ministers may not see the value of committing to greater financial support for a sector that they have long overlooked and undervalued, but the reality is that abandoning the early years sector at this critical time will cause untold damage to this country’s economy in the long term.
“The government must now accept that it needs to do much more to support early years providers in this country – otherwise, we may not have a functional childcare sector when this crisis is, eventually, over.”
PROVIDER CASE STUDIES
Shauna Caulfield Gates, owner/director, Orchard Day Nursery in Brighton
"We are currently open but operating at a loss for the children of key workers. I have a core team of 11 staff and have furloughed 21 team members on Monday 23 March. We are closed our doors on Thursday 30 April as we are no longer able to sustain the losses.
"I wanted desperately to remain open to key workers and also be reasonable (as asked) so that I am not charging fees to the parents of children that cannot attend. We have no income.
"Since we have been misled by Vicky Ford MP with no apology, I have had to redo all of my business plan going forward. I am so fearful about the future of my nursery, which is an outstanding provision. It remains to be seen if we will fold - that is almost 30 years of dedication to early years education: my team, my parents, and above all, my lovely children."
Kay Howden, proprietor of Peter Pan Pre-School in Middlewich, Cheshire
"Our setting, which is based in a multi-use church hall, is currently closed due to us having no key worker children and the church's reluctance to reopen the hall at the current time.
"We have lost a large proportion of parental fees and as we are severely limited on our access to the furlough scheme, we are going to struggle financially in the future. In addition, as we operate in a multi-use hall, we are unable to benefit from the small business rate relief grant or any business rate holiday.
"While we appreciate the continued early entitlement funding, we are vastly underpaid at £4.02 per hour. As such, we need to be able to fully access the furlough scheme in order to plan and remain buoyant in the future, and ensure that we will be able to continue to operate as the lockdown eases and ends. As it stands, we won’t have any reserves so if we don’t pick up for September, I anticipate us closing in the next 12 months."
Sarah Graven, childminder, Knutsford Childminding in Knutsford, Cheshire
“I have been an Ofsted registered childminder for 26 years and I worked with my husband (also an Ofsted registered childminder) and an assistant until 23 March, when parents made alternative arrangements for their children’s care and we temporarily closed.
“I registered our assistant for furlough but as the government U-turned on how to calculate furlough when a setting receives funding, I had to take urgent advice and do some stressful calculations before putting in a claim. I will hopefully receive the remainder of the funding payment from the local authority in June, but this is not guaranteed given some councils are now U-turning on how much they pay providers who are currently closed.
“While the Self-Employment Income Support Scheme grant is due to be paid in June, it will typically be worth very little to childminders because it is based on net income, which is usually low for childminders as we plough so much back into our businesses. Many are also worried that the government will U-turn on this as well and retain a percentage if they receive funding.
“A high proportion of childminders are not eligible to claim Universal Credit because of partner income or small savings pots, while other will not receive the income support grant because they were registered in the last tax year after a national campaign to recruit new childminders.
“As a result, many childminders do not know how they are going to survive this crisis and are now considering their future.”
Elizabeth Swatton, owner, Meadows Pre-School in Harefield, Middlesex
“We are a small village pre-school, with six staff including myself. We made the decision not to charge our private-paying parents as we felt that many parents would be struggling financially and believed that the furlough money and funding would put us in the position we would have been in before our forced closure. Although we are offered to stay open for our key worker parents, they have all chosen not to take up places we have available - some because they can look after their children themselves, some due to concerns over fees and some due to safety fears.
“Our local authority Hillingdon has been good at supporting us - however, the financial support we have received through the furlough scheme is significantly lower than average payments for this term in previous years. As a result, while I had promised my staff I would pay wages at 100%, which we did for March, I can no longer afford to do that for them.
“This lack of government support is putting us in an awful situation for September: we will now have to make major cutbacks on staffing - possibly 50% redundancies - and even this is dependent on how many children will be returning. As it stands, we have no idea how much money will be coming in, if any.”
Janine Martin, childminder, Mini Caterpillars Childcare in Kent:
"I'm a new childminder, open less than a year. I have no funded children as they are all too young and not disadvantaged. I am open at the moment but no key worker children are attending. I am not entitled to the self-employed government grant, and cannot claim Universal Credit as my partner works.
“I'm very worried about the potential closure of my little business and what it means for the future. Whilst I appreciate what the Government has done, I do feel that the small businesses that started up late last year or early this year are in deep murky waters with no idea how to get out.”
Vicky Chandler, manager, Westbury Day Nursery in Barking, Essex
"I have run my day nursery for 20 years now and have seen over the years the impact that low paid funding has had on it. The funding has never covered our hourly rate but as a setting we have had to accept this and tried to put things in place so that the financial loss didn't have a negative impact on the children. However, with the change to how we can access this furlough scheme, government support now doesn't cover my staff wages and so I will have to make staff redundant or close fully.
"A lot of nurseries like mine may not be financially able to carry on providing a quality service now, and ultimately their closure will leave high-risk children without a setting, which could result in a greater strain to the government, the NHS and the social care system, and have long-lasting effects on their mental health. My main concern is those poor children who may not have the escape of going to a setting now."
SURVEY RESULTS
NB: The online survey ran from 22 - 29 April 2020 and received 3167 responses.
How would you describe your provision? Please choose the closest option.
Pre-school: 50%
Nursery: 34%
Childminder: 11%
Out-of-hours club: 1%
Primary school nursery class: 0.4%
Maintained nursery school: 0.1%
Specialist provision: 0.1%
Other: 3%
Are you / your setting currently open to key worker and/or vulnerable children?
Yes, we are currently open to key worker children and/or vulnerable children: 32%
No, we are temporarily closed: 67%
No, we have closed our doors permanently: 1%
[If currently open]Assuming the current requirement on childcare providers to remain partially closed continues, how likely do you think it is that you will still be open to key worker children and/or vulnerable children in 4 weeks’ time?
Very likely: 58%
Somewhat likely: 34%
Somewhat unlikely: 6%
Very unlikely: 3%
[If unlikely] Why do you think it is unlikely that you will be open in 4 weeks’ time? Please select all that apply.
Unlikely to be financially viable to stay open: 73%
New limits on support for furloughing staff for providers delivering funded places:48%
Unlikely to have enough demand for places for key worker children and/or vulnerable children: 35%
Unlikely to have enough staff due to sickness or self-isolation (for group settings):6%
Don’t feel able to keep staff safe (for group settings) / myself safe (for childminders): 6%
Unlikely to have enough staff for other reasons: 5%
The possibility of me or family members being ill or self-isolating (for childminders): 4%
Don’t feel able to keep children safe: 2%
Other: 7%
[If temporarily closed]Why did your setting take the decision to close temporarily? Please select all that apply.
Not enough demand for places for key worker children and/or vulnerable children: 77%
Not financially viable to stay open: 31%
Didn’t feel able to keep staff safe (for group settings) / myself safe (for childminders): 18%
Not enough staff due to sickness or self-isolation (for group settings): 17%
Didn’t feel able to keep children safe: 11%
Not enough staff for other reasons: 4%
Not able to operate due to me or family members being ill or self-isolating (for childminders): 3%
Other: 16%
Which of the following financial support schemes are you/your setting accessing or planning to access? Please select all that apply.
Continuation of ‘free entitlement’ funding for children not attending the setting: 91%
Coronavirus Job Retention Scheme (the ability to furlough staff with 80% of wages paid by government): 64%
Business rates holiday for the financial year 2020/21: 22%
Self-employment Income Support Scheme (grants for up to 80% of profits for the self-employed): 14%
Small business grant funding (grants of £10,000 for settings in receipt of small business rate relief or rural rate relief): 14%
Business Interruption Loan Scheme: 3%
None of the above: 2%
Other (please specify): 6%
Are any of the sources of financial support listed below schemes that you/your setting would like to benefit from, but can't? Please select all that apply.
Coronavirus Job Retention Scheme (the ability to furlough staff with 80% of wages paid by government): 35%
Small business grant funding (grants of £10,000 for settings in receipt of small business rate relief or rural rate relief): 28%
Continuation of ‘free entitlement’ funding for children not attending the setting: 12%
Self-employment Income Support Scheme (grants for up to 80% of profits for the self-employed): 9%
Business Interruption Loan Scheme: 9%
Business rates holiday for the financial year 2020/21: 7%
None of the above: 33%
Other: 8%
When your setting or provision was fully open, approximately what percentage of the children you cared for received 'free entitlement' funding for two-, three- or four-year-olds?
None: 4%
1-10%: 5%
11-20%: 5%
21-30%: 8%
31-40%: 8%
41%-50%: 11%
51%-60%: 10%
61%-70%: 11%
71-80%: 17%
81-90%: 12%
91-99%: 8%
100%: 2%
On Friday 17 April, the Department for Education released guidance stating that providers receiving ‘free entitlement’ funding would be limited on how much support they can receive through the Job Retention Scheme. Before this guidance was released, what was your understanding of the support providers would be receiving?
I had thought that relevant providers would be able to fully benefit from both schemes: 75%
I had thought that relevant providers would able to access both schemes but that there would be additional limits or conditions:15%
I had thought that providers receiving ‘free entitlement’ funding’ wouldn’t be able to furlough staff: 8%
Other: 1%
I don’t know what this refers to: 1%
If you are eligible for the Coronavirus Job Retention Scheme, had your setting furloughed any staff ahead of Friday 17 April?
Yes, I/we had furloughed staff already: 71%
Not yet, but staff had been informed they were going to be furloughed: 11%
Not yet, but there were plans to furlough staff at some point: 5%
No, I/we were still considering whether or not to furlough staff: 6%
No, there were no plans to furlough staff: 6%
Don’t know / Unsure: 2%
What impact will the new guidance have on your setting’s furloughing plans? Please select all that apply.
I / We may need to make staff redundant: 47%
I / We may need to retract offers to top up staff wages to 100%: 37%
I / We may need to close permanently: 22%
I /We many need to retract offers to waive or reduce parent fees: 21%
I / We may need to retract offers to top up staff wages more than 80% but less than 100%: 16%
I / We may need to close temporarily during the coronavirus crisis: 14%
It will have no impact: 10%
Other: 13%
How would you describe the financial impact that the coronavirus outbreak has had on your setting or provision so far? Please explain your answer.
Very negative: 48%
Somewhat negative: 41%
Neither negative or positive: 10%
Somewhat positive: 1%
Very positive: 0%
Which of the following statements most matches your view on the support that government has provided for early year providers during the coronavirus so far?
The government has provided more than enough financial support for early years providers: 2%
The government has provided enough financial support for early years providers: 25%
The government hasn’t provided enough support for early years providers: 74%
How likely do you think it is that your setting or provision will still be operating this time next year?
Very likely: 24%
Somewhat likely: 49%
Somewhat unlikely: 19%
Very unlikely: 6%
We have already confirmed we will be closing permanently: 0.4%