MPs blame government policies for nursery closures in deprived areas

A cross party panel of MPs has called on the government to revisit funding for early years education in its forthcoming Spending Review after inquiry evidence showed a drastic rise in nursery closures since the inception of the 30 hours scheme.

Pledge board of MP signatures. Credit: APPG for Childcare and Early Education

The report 'Steps to Sustainability' by the All-Party Parliamentary Group (APPG) on Childcare and Early Education revealed nurseries were more likely to close in ‘deprived areas’ as poorer parents can’t afford to pay higher fees as well as add-on costs for dinners, snacks and other services that many settings charge for in order to stay sustainable.

Tulip Siddiq MP, the APPG chairwoman said: "We know that the early years are hugely important to a child's physical and mental development and future life chances.

"However, there is a significant body of evidence to demonstrate that childcare providers are battling to achieve and maintain financial sustainability and that Government policies are a major cause of this challenge."

Increase in nursery closures by 66 per cent since 30 hours started

An estimated £662m gap in early years funding is leading to more and more settings closing their doors for good, according to the report, which cites evidence from Ceeda, showing nurseries in deprived areas are twice as likely to anticipate closure as those in the most affluent (17 per cent vs. 8 per cent).

The report states 'Should this trend continue, we risk facing a situation where only wealthy families are able to access childcare services, leading to a reduction in educational opportunities for children as well as more challenges to parents looking to go back into work.

'Particular focus and energy must be placed by the government on addressing the rate of closure in lower social-economic areas, especially with the combined risks and repercussions from diminishing programmes such as Sure Start Children’s Centres and Family Hubs.'

The report also quotes information gathered by the National Day Nurseries Association (NDNA) showing the closure of settings has increased by 66 per cent since the introduction of the 30-hours funded childcare policy.

It also mentions a survey conducted by the Early Years Alliance which found 42 per cent of childcare providers say there’s a chance they will have to close their setting in the next academic year due to underfunding.

The inquiry report found the average cost to deliver one hour of early education and childcare for three and four-year-olds is now an estimated £5.36 which is set cost per hour against an average funding rate of £4.46. This funding leaves a 20 per cent funding shortfall.

‘Parents cannot afford additional fees in deprived areas’

At various APPG meetings since its inception in 2017, consecutive panels of MPs and peers have heard from parents, who are aware that extra costs are being added to cover the shortfall.

Giving evidence at one hearing, parent Aimi Turnbull said: “At my setting we pay for food even when my child is absent or we go away on holiday, but I understand this is being done not because the nursery wants to charge unfair costs, but because it’s essential to it remaining open.”

Nicole Politis, director of the Portico Nursery Group explained to the panel that she had a number of settings in areas of varying socio-economic affluence. She said: “Three years ago, nurseries in these deprived areas were completely full. Now, those in affluent areas are full, and in deprived areas, the numbers of children attending are so low that I’m having to close them.

"Sadly, some parents cannot afford the additional fees, and this is being exacerbated by the roll-out of Universal Credit. In the end, this means that the [30-hours] scheme is not always reaching the most vulnerable families.”

Full list of recommendations

In the inquiry report it states that with regards to 30 hours, ‘the APPG is concerned that the Government has to date failed to adequately respond to the evidence and experience that is being presented from the frontline, or from Parliament'.

In particular, the APPG stated that the Government had not paid heed to the Education Select Committee reports released in 2018 and 2019 which criticised the Government funding rates per child and accused the 30 hours scheme of hindering social mobility for pre-school aged children.

The Parliamentary panel has called on the Government to commit to an annual review of early years funding costs and rates, with a view to increasing funding levels as necessary, “to ensure they continue to cover provider delivery costs”.

Another of the APPG’s main recommendations was that business rates relief needed to be given to providers.

The panel found the revaluation of business rates in April 2017 had a very negative impact on private providers. In some areas there has been a doubling of their rates, with one seeing a rise from £13,000 to £30,500 following revaluation in 2017.

Other recommendations by the APPG included:

1. The Treasury and the Department for Education address the funding gap that has developed as a result of Government policies

2. The Government must commit to a cross-department annual review of early years costs and funding rates

3. The Treasury must deliver full business rates relief to providers

4. Providers must be supported to ease recruitment and retention challenges

5. Reporting requirements must be made more consistent and less of a burden

6. Prioritise closing the funding gap in deprived areas

7. Universal Credit should allow payments direct from the Department for Work and Pensions to providers

8. The Government should establish an independent early years commission

9. Parliamentarians should lead a campaign to champion the work of childcare practitioners

The last two items were considered to be long term goals by the APPG.

To view the report, click here