The UK is in the midst of a childcare crisis. It has one of the most expensive systems in the world, with the average annual cost for a full-time two-year-old standing at £14,836. Many parents have to sacrifice careers and aspirations to provide domestic care instead. Yet this crisis runs much deeper than exorbitant fees. Behind the scenes, a calamitous concoction of funding shortfalls, staff shortages, and financialised business models is constructing a perfect storm in which childcare provision could collapse completely. 

The British taxpayer contributes over £3.7 billion to the early years care sector in the form of parental subsidies. Children aged three and four (and two-year-olds whose families receive state support) are entitled to 15 or 30 hours of free care per week, depending on their families’ employment status. In this year’s Spring Budget, Chancellor Jeremy Hunt announced the staggered expansion of the subsidy to give all children aged nine months to school age the same offer by September 2025.

Unfortunately, the sentiment among many early years professionals is that this policy has missed the mark, and is blind to the structural problems driving dysfunction. Two fundamental issues lie at the root of this criticism.

Firstly, the money provided by the government to nurseries to fulfil funded hours is inadequate. One nursery manager in Brighton, echoing the feelings of many, explained to The Badger that they felt “free childcare is being mis-sold by the government and will lead to a lot of parental confusion and frustration,” as providers will have to ask parents to pay top-up fees for their spaces. The alternative? Financial losses. If providers do not find ways to balance their books, the funding shortfall is simply too great and they will close, joining the 216  nurseries forced to shut down nationwide in the last academic year alone. 

Image: Save Bright Start

Secondly, there are not enough staff to cover the increased demand for care. With pay comparable to retail and extensive job insecurity, many have left the sector. Meanwhile, the number of individuals beginning Early Years Teacher Training is down 77% from 2014 levels. Fewer graduates in the workforce raises concern over care standards, particularly for children with Special Educational Needs and Disabilities (SEND) who benefit greatly from skilled professionals. In a survey conducted as part of the Junior Research Associate scheme, the material impact of these changes was uncovered. Nursery managers in Brighton consistently ranked ‘finding appropriate qualified staff’, ‘staff costs’ and ‘staff retention’ as the most pressing challenges to the sector.

A third dynamic affecting stability and quality in the sector is growing dominance of large, private equity backed, financialised childcare chains. The UCL Social Research Institute finds that these chains primarily focus on profit and expansion, through debt-funded mergers and acquisitions. The extraordinary levels of debt and low financial reserves observed in such companies places care provision at risk of collapse at any moment. If this were to happen complex corporate structures allow the investors and architects of the model to emerge relatively unscathed.Evidence also suggested that these firms spend up to 15% less on staffing costs, speculated to be achieved through low wages and undesirable qualification levels. 

Austerity, financialisation, recruitment problems, and funding shortfalls work in tandem

These revelations come after a prolonged period of austerity-induced closures to council-maintained nurseries, which often provide higher quality care for children with SEND. In an exchange with Councillor Bella Sankey, Leader of Brighton and Hove City Council,  she gave assurance that the council “are very keen to safeguard council-run nursery provision” but acknowledged they are up against it with “more than £25 million in savings to find for next year”. In Brighton, council-maintained Bright Start Nursery is once again under threat. Parents at the nursery who successfully halted its closure last winter have labelled the proposed changes – which will cut places and potentially staff – as both devastating and illogical. They point out ambiguities in the council’s financial case which cast doubt over whether the proposals will actually save the city money.

The sector’s situation is unsustainable. Austerity, financialisation, recruitment problems, and funding shortfalls are working in tandem to undermine quality and destabilise provision. So what can be done? Well, there is hope. Experts have recommended that public money be withheld from companies that cannot demonstrate financial robustness. They further  propose that Ofsted adopt increasingly frequent and rigorous inspections, collecting data on new aspects to aid this process. Others have emphasised the importance of properly funded childcare support that covers nurseries’ operating costs and training incentives. But, time is of the essence. Urgent action must be taken now to restore stability, or we will reach 2025 and thousands of families will be unable to access the care they are entitled to.

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