Sharp rise in summer nursery closures ring alarm bells for winter months

Many more nurseries have closed during the summer term than previously, setting course for a disastrous year for early years settings, says National Day Nurseries Association (NDNA).

NDNA, the voice of the early years sector, has tracked nursery closures since the 30 hours policy was introduced in 2017. During the summer term April to July 2022, 65% more nurseries have closed compared with the same months in 2021.

Many more nurseries tend to close during the second half of the year, with Ofsted reporting 196 net closures from September 2021 to March 2022. The summer term is normally the busiest time of the year for nurseries before four-year-olds leave to start school.

With fuel bills soaring and inflation predicted to hit 18% next year, NDNA is warning the Government, the new Prime Minister and new Ministers at the Department for Education that this academic year could see record-breaking numbers of closures leading to a catastrophic reduction in places.

Purnima Tanuku, Chief Executive of NDNA, said: “As we enter the new school year, our nurseries across the country are seriously worried about how they will make it through this winter.

“Most nurseries are small businesses and, similar to the picture in other sectors, these are hugely impacted by rocketing fuel costs, inflation and chronic underfunding. But nurseries have also had to pay unfair business rates which tax the space they give children to grow, explore and develop.

“We are expecting minimum wages to go up again as low paid workers grapple with inflation in double figures. Meanwhile qualified early years practitioners are leaving the sector to take up better paid work elsewhere, leaving nurseries struggling to recruit.

“All nurseries’ challenges can be sourced back to government policy, offering parents so-called ‘free’ childcare places, then paying only part of the cost of delivering them. If your biggest customer isn’t paying the going rate that makes it difficult to survive.

“Funding rates per child increased by less than 4% this year and yet inflation is running at more than 10% already. Every child in early years learns about quantity, number and understands ‘less’ and ‘more’. Ministers need to learn this lesson and recognise that inflation is currently more than double their last funding rate increase. This is unsustainable and could add up to disaster for children, families and the wider economy.”

More than a third of closures were in the 30% most deprived boroughs, with 15% of closures in the 10% most deprived wards. This compares to just 8% of closures in the 10% most affluent parts of the country.

Purnima added: “We are particularly concerned that nurseries are more likely to close in areas of deprivation, which is where they are most needed. This is because these early years settings are more reliant on funded-only places, meaning they are more affected by the shortfall in funding.

“But children from lower income families are most at risk of falling behind their peers by the time they start school and never catch up. High quality early education is the best way to support them. They must be able to access places to give them the best chance in life.”

See a Purnima speaking about closures here:

NDNA’s recommendations to stop the tide of closures sweeping the country:

  • The Government must urgently raise the childcare funding rates to at least keep pace with inflation and minimum wage rises due to be announced in autumn (for April 2023)
  • The Government must support nurseries with recruitment and retention issues –allowing childcare practitioners to be included on the shortage occupation list and supporting bridging qualifications to allow more people to enter the workforce
  • Ministers must remove business rates and VAT for childcare businesses in line with schools and academies to support providers

NDNA nursery member Judith Ish-Horowicz, who owns and runs a nursery in Wandsworth, said: “My nursery has had consistent outstanding ratings from Ofsted. We have been open for more than 30 years. It has never been as difficult as it is now.

“Government funding is so inadequate, I don’t understand why we are not either funded adequately to pay good wages, commensurate with early years expertise, or added to the priority list of shortage skills so we can appoint staff from abroad.

“I know of no other sector that is expected to subsidise the government. The government promises free education for three to four-year-olds but does not pay enough for the staff to be paid a living wage or for their employers to reward their commitment and professionalism in educating and preparing children for life as well-balanced, productive, skilled adult citizens.

“There have been numerous government reviews, all of which have recommended increasing government funding for early years and all of which have been ignored. Not only have I been unable to pay myself in the past year, I have had to dip into my savings to keep afloat. Things look to get even worse over winter with rising gas and electricity costs.”

Official Ofsted statistics also uncovered a net reduction in the numbers of settings from April to June 2022 of 76 compared to a net gain of 20 in the previous year’s first quarter. This backs up NDNA’s own figures that fewer nurseries tend to close in the summer months compared to the second half of the financial year.

Every nursery closure leaves children unsettled, even if their parents can find them a place elsewhere. They will be faced with a new environment, new practitioners and will need to make new friends.

As well as providing opportunities for children, early education and care supports working families. Nurseries are community hubs. If parents struggle to find childcare for their children, they may be unable to work or  reduce their hours, further damaging economic growth with working mothers potentially losing out on up to £10.9bn of earnings. (see Notes to Editors below).

Insolvency data since April 2019 shows that the average number of pre-primary education business insolvencies has increased by 71% from September 2021 to April 2022 compared with the same period in 2019/2020.

Closures data in numbers:

  • NDNA has uncovered 124 nursery closures from member data and publicly available reports, checking these against Ofsted’s register, between April 2021 to March 2022 – this is the tip of the iceberg as NDNA can only report on closures it is aware of
  • These closures affect 4,999 children’s places based on registered capacity with Ofsted
  • This is fewer than the previous “Covid year” of 232 closures (April 2020 to March 2021)
  • Summer term 2022 has seen an increase of 65% in the rate of closures compared with the same period last year (April to July)
  • Ofsted statistics back this up with a 76 net reduction in the number of nurseries from April to June 2022 – compared to a net gain for the same period in 2021
  • Ofsted statistics from September 2021 to March 2022 showed a net reduction in nurseries of 196 – compared to a net gain of 20 providers in the first half of the year
  • 34% of closures from April 2021 to March 2022 are in the top 30% areas of deprivation compared to 27% in the top 30% most affluent areas
  • 15% of closures were in the top 10% most deprived wards

    Number of nursery closures by area of deprivataion

Childcare and maternal employment:

A New Statesman survey in June reported that 70 per cent of respondents said childcare costs were a significant reason that mothers chose to be stay-at-home parents. 

In their July 2020 survey, maternity rights campaigners Pregnant then Screwed learned that 51% of mothers did not have the necessary childcare to be able to work.

The Centre for Progressive Policy’s report Women in the Labour Market (October 2021) reported that if women had adequate access to childcare they could increase their earnings by between £7.6bn to £10.9bn

The Fawcett Society’s Childcare and Early Education Systems report in June 2022 cited the UK female labour market participation was 75% compared to men’s 83%.

Insolvency data: monthly statistics to April 22

April 2019-Mar 2020: = 20 /12 = 1.66 average monthly pre-primary education insolvencies:

April 2020-March 21: = 26/12 = 2.166

April 2021 – March: 22: = 30/12= 2.5

September 2019 – April 2020: = 17/8 = 2.12

September 2021 – April 2022: = 29/8 = 3.62

Rural nursery closures

Rural areas have also suffered, with a 20% reduction in childcare providers since 2015 compared to 13% reduction in urban areas – read more here

  • England
  • Closures
  • Ofsted

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