Childcare sector in peril following early years funding withdrawal

Hundreds of nurseries may be forced to close or lay off staff in the coming weeks, following a restriction of furlough funding for the sector. Tulip Siddiq MP, Labour’s Shadow Minister for Children and Early Years, is calling on Ministers to rethink this decision and come forward with a plan to fund childcare providers through the coronavirus crisis.

In guidance published on Friday night – three days before applications for the Coronavirus Job Retention Scheme open – severe limitations were placed on access to the furlough scheme for early years settings which also receive local authority funding to provide free childcare. This is despite earlier guidance which explicitly stated that “providers can access this scheme while continuing to be paid the early entitlements funding via local authorities”.

Nurseries and other childcare providers have already furloughed staff on the basis of the previous guidance, and they will now face a choice between paying staff not to work or making them redundant. With half of nurseries already closed completely due to financial pressure from the loss of parents’ fees, this decision is likely to result in many childcare workers being made redundant and more providers closing, either temporarily or permanently.

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

“This withdrawal of furlough funding for early years providers was buried in government guidance released on Friday night, leaving the childcare sector panicking just three days before the scheme opens.

“Early years providers were struggling before coronavirus, and many now face an existential threat from the loss of parents’ fees in this crisis. I understand that Ministers want to ensure businesses can’t profit from emergency support, but the funding that providers were led to believe they could access was a lifeline.

“The decision to restrict this funding nearly a month after it was promised in full will cripple nurseries, many of which have already been forced to close. I fear the result will be many valued childcare workers losing their jobs and more providers being forced to shut completely, and perhaps permanently. This will have a worrying knock-on impact on key workers who rely on childcare now, and the parents who will need it in the future.

“Childcare is the fourth emergency service in this crisis, and I know that the Government does not want the early years sector which provides it to collapse. So I am urging Ministers to rethink this decision and come forward with a proper funding plan to ensure that childcare providers can stay open and survive this crisis.”

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