Childcare providers: fears grow for nurseries amid soaring energy bills after thousands closed during Covid

Childcare experts are “seriously concerned” about the future of the sector in the face of soaring energy bills, following thousands of nursery and other business closures during the Covid pandemic .

One in 10 early years childcare providers closed in the North East alone in the year to March, with campaigners warning the situation is likely to worsen both there and across the rest of England, with some providers seeing their energy bills rise by up to 600%.

There were 3,500 fewer registered early years childcare providers in March 2022 compared to a year earlier, according to NationalWorld’s analysis of Ofsted’s childcare register. It means the equivalent of almost 10 providers were lost every day on average. Overall there has been a 6.3% drop in providers across the country in just one year, from 56,748 to 53,193.

The North East was worst affected, with a net loss of 203 providers – almost 10% of the region’s total.

One think tank said the figures should be a “wake up call” for the Government, while the Professional Association for Childcare and Early Years warned the trend of closures looks set to continue.

Early years providers are those that cater for children aged from birth to five. The sector was beset by difficulties before Covid, with many businesses and childminders struggling to make ends meet.

The Government has faced criticism over its 30 hours free childcare policy, which industry bodies say fails to reimburse providers for the costs they incur.

But the pandemic saw a rapid decline across the industry. Ofsted’s figures show a 9.8% drop in the number of early years providers registered in England between March 2020 (the start of the pandemic) and March 2022. Overall there are 5,800 fewer childcare providers since the start of the pandemic –  with almost 24,000 fewer places available for children

The Government declined to comment on the figures –  although it did say that billions have been spent on to support families with childcare.

Areas with the biggest loss of childcare providers

The North West has also had a high proportion of early year childcare providers close in the last year, losing 501, or 7.4%. The interactive map below shows you how many early years childcare providers have been closed in your region.

At a local level Halton in the North West has had the biggest loss of services. The Cheshire authority has seen a 14.1% drop on March 2021’s figures (one in seven), with the number of early years childcare providers dropping from 135 to 116.

Blackpool was the second hardest hit with a 13% drop in providers. This was followed by Darlington and Middlesbrough which have both seen a 12.6% drop.

Thousands of childcare places have been lost as a result of the closures. Overall,there were 6,600 fewer childcare places available for parents to use in March 2022 compared to a year earlier, NationalWorld found. The North West has lost the greatest total number of places with 3054, followed by the East Midlands with 1656 and the North East with 1458.

‘Soaring overheads and dwindling staff numbers’

On Wednesday (21 September), the Government announced an emergency energy price cap for UK businesses, which will cut their bills  by around half for six months from 1 October.

But the cap still leaves businesses paying far more than they were last year.

Helen Donohoe, policy advisor at the Professional Association for Childcare and Early Years (PACEY), said the plans  “do not go far enough”, adding she expected to see  further impact on the childcare sector.

Ms Donohoe said: “Until the Government takes action to address the historic issues around low pay barriers and unsustainable funding levels then this trend is expected to continue, especially as these issues have been compounded by the cost of living crisis with soaring overheads and dwindling staff numbers.”

Purnima Tanuku OBE, chief executive of the National Day Nurseries Association (NDNA), added that she was “seriously concerned” for the sector’s future.

Ms Tanuku said: “Many nurseries are small businesses who just cannot absorb the enormous bills they are facing. Our members are telling us they have energy bill increases of between 300 and 600% which are just unsustainable.

“Early years education and care is in a worse situation than most sectors because of chronic government underfunding for the hours it offers parents for free.”

‘A wake up call to the Government’

Luke Myer, research fellow at the Institute for Public Policy Research North, said the disproportionate numbers of childcare providers closing in the North East is part of a wider picture of regional divides and “a broken system” of funding for early years education.

“Together, these are having a serious impact on children and families who live in the region,” he said.

“The North East has the highest rate of child poverty in the UK, at 38%. Meanwhile, the cost of childcare is unaffordable and holding back too many parents in the region. At the same time, the North East has more children in households without heating; school trips; an annual week’s holiday; hobbies and leisure activities.

“The impact of the cost of living crisis means these deep inequalities are accelerating. NationalWorld’s figures are a wake up call to the government who must deliver on its promise to ‘level up’ by empowering places like the North East to level up for themselves, including through prioritising investing in essential early years provision.”

The Department for Education declined to comment on the figures.

However, in background information the Government said it has spent more than £4 billion in each of the past five years to support families with the cost of childcare.