Childcare providers in England are currently facing significant losses according to research analyst group Ceeda’s. Its data revealed that as of 8 June, providers were operating at average occupancy levels of 37%, down from 77% in the spring of 2019.

The reduced take-up amid the coronavirus pandemic means childcare providers face average losses of £3.63 per funded two-year old child per hour (a 68% funding shortfall), and £2.52 per funded three-and four-year-old child per hour (a 55% funding shortfall).

Even if take-up increased over the next year, providers would still face a respective £3 and £1 per hour funding loss.

Due to the funding shortfall, many providers will simply go bust, leaving parents without childcare as the remaining settings will see a spike in demand and limits on how many children they can accommodate.

Research by the Early Years Alliance revealed that 25% of member said it is likely they will be forced to close within the year.

As such, the Alliance is campaigning for the government to commit to urgent transitional funding to support the childcare sector through this period. It is calling on the government to extend the financial support with costs such as extra cleaning being provided to schools to early years settings; extend businesses grants currently available to retail, hospital and leisure businesses to childcare providers; and extend the £1bn ‘Covid-19’ catch-up fund for schools to the early years sector, as was initially announced.

‘Early years sector is at a crunch point’

Neil Leitch, chief executive of the Early Years Alliance, said:“The government says it has done enough to support childcare providers during the coronavirus crisis, but these figures from Ceeda show that this couldn’t be further from the truth.

“As we have long warned would be the case, the joint pressures of inadequate government funding and reduced parental demand for places means many nurseries, pre-schools and childminders are losing money on every childcare place they offer. This is simply not sustainable.

“Even in areas where parental demand for childcare places remains high, providers are currently restricted on how many children they are able to care for under government guidance, which is going to place even more financial pressure on them over the coming months.

“The fact is that the early years sector is at a crunch point, and unless urgent action is taken, we are going to see many, many more settings forced to close their doors over the coming months. This could mean chaos for parents – and particularly mothers – trying to access childcare in order to return to work at a time when the government is desperately trying to restart the economy.

“Ministers must now commit to providing the financial support that childcare providers need to remain sustainable throughout this crisis and beyond. Anything less puts the long-term viability of the sector as a whole at risk.”

A Department for Education spokesperson, said:“Early years professionals have continued to provide support and reassurance to families during this period of uncertainty, and we have been working very closely with the sector as settings have welcomed back more children.

“We have protected nurseries, preschools and childminders with significant financial and business support. This includes the Coronavirus Job Retention Scheme, which providers can access for employees whose salary is not covered by public funding, and continued early years funding to councils, worth a planned £3.6bn in 2020/21.”