Tens of thousands of childcare providers at risk of closure because of government funding changes, new analysis reveals

Nearly 20,000 childcare providers could close within six months if the government push ahead with changes to the early years funding system in the new year, according to Labour analysis. 

Since March, the impact of Covid-19 has led to a stark decline in the number of families accessing childcare places. Government plans to change funding for nurseries, childminders and pre-schools, to match these current low levels of attendance from January 2021, could see 25% of providers close within six months according to a survey by the Early Years Alliance.

Labour analysis shows this could result in nearly 19,000 childcare providers being forced to close their doors within six months, with over 30,000 at risk of closure by next Christmas.

Mass closures of early years providers would lead to many parents being unable to access the childcare they need, making it harder for many parents to return to work.

Commenting, Tulip Siddiq MP, Labour’s Shadow Minister for Children and Early Years, said:

“The government have repeatedly failed to give the early years sector the support that it needs throughout this pandemic, and now many thousands are facing a cliff-edge.

“The government’s plans to change funding in the midst of a pandemic and while childcare attendance is down could put thousands of providers and jobs at risk.”

“They must urgently rethink these plans."

A survey carried out by the Early Years Alliance in November found that 25% of childcare providers believed that they would crease to be viable within six months if the government change their approach to early years funding next year.

56% (28%+ 28%) of providers say [the funding changes] would have a negative or very negative impact on them - and of those, nearly half (45%) don't think they would be able to remain viable for more than 6 months (5% + 16% + 24% = 45%)

If the government goes ahead with plans to base early entitlement funding on actual attendance as of January 2021, rather than basing it on pre-Covid attendance levels, how long do you anticipate being able to remain viable?

Less than a month


1 - 3 months


4 - 6 months


7 - 9 months


10 - 12 months


More than a year


Source: Early Years Alliance

●      There were, as of August 31 2020, 75,300 early years providers registered with Ofsted https://www.gov.uk/government/publications/childcare-providers-and-inspections-as-at-31-august-2020/main-findings-childcare-providers-and-inspections-as-at-31-august-2020

●      If 25% of these providers were to close then there would be 18,976 providers lost

●      The same analysis shows that 43% of providers – 32,048 – do not believe they would remain viable for a year. 

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