Over half of local authorities in England anticipate permanent closure of childcare providers after Covid funding ends

Published: Monday 21st December 2020

As the Government confirmed that funding arrangements to support the childcare sector through the pandemic will end in January*, new research reveals that over half (58%) of local authorities in England believe local childcare providers will permanently close as a result of this support being withdrawn.

In addition, a quarter (26%) of local authorities say they expect to see providers reduce the number of free early education entitlement places they offer, which is of particular concern as these places are shown to narrow the achievement gap between disadvantaged children and their peers. 

Coram Family and Childcare, publishing the findings today as part of its briefing on the impact of Covid-19 on the childcare sector, warns that closures are likely to lead to greater shortages in childcare availability for families, in a system that was already under pressure pre-pandemic. Childcare is vital for families – it not only enables parents to work but high quality childcare boosts children’s outcomes and prepares them for school. Over a third (35%) of local authorities report that the number of providers permanently closing in their local area has increased in the last year. 

Whilst the majority of local authorities report they have not yet seen an increase in childcare shortages, this could be due to the fact that 73% have seen a decrease in demand from families over the pandemic, likely because of changes to employment or reluctance to use childcare because of concerns about the spread of the virus. If many providers do close permanently, this could mean significant shortages in childcare supply if and when demand for childcare returns to pre-pandemic levels. 

There is also particular concern over the availability of childcare for children with special educational needs and disabilities (SEND) and school-age children, with local authorities more likely to see a reduction in the number of places compared to demand in both these areas. Coram Family and Childcare’s annual Childcare Surveys**, published prior to the pandemic, identify that there were already significant childcare shortages for these groups of children.  

The briefing reveals the challenges the childcare sector has faced in trying to remain sustainable during the crisis, which could have knock-on effects for families, with 39% seeing childcare providers raise their prices and 30% seeing providers increase the number of children looked after by each staff member. 

Megan Jarvie, Head of Coram Family and Childcare, said: “The ending of additional Government support for childcare is going to be a blow for many childcare providers and the families who depend on them. We all rely on the childcare sector to support the learning and development of children and to enable parents to work. There are already signs of the pressure on childcare providers - a third of local areas already report an increase in nursery closures and shortages are increasing in some areas. It is vital that the sector is supported so that every family can find the high quality childcare they need.” 

Today’s briefing is published ahead of Coram Family and Childcare’s annual Childcare Survey 2021, due next February.

Read the briefing

 

*Since the beginning of lockdown, the Government has continued to fund free early education entitlements based on pre-pandemic attendance levels. This has meant that providers have received funding for their places, even if children have not taken them up. This has helped to protect the income of providers, particularly those who received a larger proportion of their income from Government funding rather than parent fees. The Government announced on 17 December that this will stop and that from January, and it will revert to funding following the child, whereby providers only receive funding for children that are attending 

**Coram Family and Childcare’s 20th annual Childcare Survey was published in February 2020: familyandchildcaretrust.org/childcare-costs-surge-over-double-rate-inflation