We know, of course, that the early years childcare sector plays a vital role in the development of children, providing them with essential skills and nurturing their cognitive and emotional growth. However, none of this is possible without adequate childcare funding and skilled and qualified staff. Even before the pandemic and the current cost-of-living crisis, the sector was facing a significant funding constraint, which led to many nursery settings closing their doors and people losing their jobs due to inadequate childcare funding.

Our industry is primarily funded through parental fees and government subsidies. However, the childcare funding provided by the government has been inadequate, leading to nurseries struggling to maintain their financial viability. According to a report by the National Day Nurseries Association (NDNA), more than a third of nurseries in England are running at a loss, with the average nursery operating at just 77% of capacity.

Why are there childcare funding constraints?

In essence, the government's childcare funding rates have not kept up with the increasing costs of running a nursery. For example, the National Living Wage increases every year, as have business rates and other overhead costs, putting pressure on nurseries to raise their fees to cover these expenses. However, parents' ability to pay higher fees is limited, resulting in a reduction in the number of children attending nurseries. Research from the EY Alliance (February 2023) shows that almost 9 in 10 early years providers will increase their fees during 2023.

Poor Childcare Funding - What Is Impact?

The impact of this childcare funding constraint is significant. With reduced funding, nurseries have been forced to make cuts in various areas, such as staffing, resources, and maintenance. This has affected the quality of care provided to children, as nurseries cut the number of staff, increase staff-to-child ratios, and reduce the amount and quality of resources available to children. The resulting closure of nurseries has had a significant impact on both staff and parents. Staff who have lost their jobs have had to find alternative employment, often at an even lower rate of pay, while parents have been left without affordable childcare options, impacting their ability to work or study. Additionally, the closure of nurseries has led to a reduction in the number of places available, further limiting access to early years education and care.

Let's Talk Solutions

Simply put, to address this childcare funding constraint, the government needs to increase its funding rates and provide adequate financial support to nurseries. This includes increasing the Early Years Pupil Premium, which provides additional support for disadvantaged children, and increasing the hourly rate paid to nurseries for funded places. Additionally, the government needs to review the business rates system, which burdens small businesses such as nurseries disproportionately.

Pandemic Impact

According to a report by the NDNA in 2021, around 6% of nurseries in England were forced to close permanently due to the COVID-19 pandemic. The pandemic has significantly impacted the early years sector as a whole, with many nurseries struggling to maintain their financial viability due to reduced demand, increased costs, and limited government support.

​The Way Forward - Funded Apprenticeships

Childcare apprenticeships offer learners an excellent opportunity to develop their skills and knowledge, earning as they are learning. However, in recent years, many learners have been withdrawing from their apprenticeships, citing low wages and limited career progression opportunities in the sector. The average salary for a qualified early years practitioner in the UK is around £18,364 (rising to around £19,000 in London), significantly lower than the national average salary. This has resulted in many learners leaving their apprenticeships for higher-paid jobs in other sectors, for example, Aldi’s starting pay for 2023 is £11.00 an hour (this equates to £22,000 per year). Another reason why learners are leaving their apprenticeships is the perceived limited career progression opportunities in the early years sector. Many feel that there is little scope for career advancement beyond the role of a practitioner, with limited opportunities for management or leadership roles. To address some of these issues, salaries need to increase for qualified practitioners and more opportunities for career advancement provided, such as management and leadership roles. In addition, those who work in the sector need to play their part by promoting the value of working in such a great industry and the importance of providing high-quality care and education to young children.

National Apprenticeship Week and National Careers Week are held annually and offer fantastic opportunities for employers and apprentices to become advocates of all things career-focused in childcare, from starting out as a Level 2 Childcare apprentice to progressing through to leadership and management roles within a childcare setting. With our sector possibly being at the lowest it’s ever been, there is no better time than now to be a childcare ambassador – spread the word!