Early years sector warns of setting closures and cost rises as they call for energy support to be extended

Nurseries, pre-schools and childminders in England have warned of further closures and cost rises if energy support is not extended, a new survey by leading early years membership organisation the Early Years Alliance has found.

The survey, which ran online from 17 to 24 October and received 1,265 responses, found that nearly seven in ten (68%) nurseries and pre-schools and three in five (61%) childminders said they are likely to have to increase fees for parents over the next year in order to meet the rising cost of energy if financial support from the government does not go beyond March 2023. While more than one in ten (11%) nurseries and pre-schools and over one in 20 (6%) childminders warned that they would be likely to close permanently.

Since 1 October, a six-month energy price cap for businesses has been in place to help industries manage rising gas and electricity costs. From the same date, a separate six-month cap for households has been enforced which limits the cost of energy to £2,500 for an “average” household. 

Both schemes will end in March, when the government will introduce targeted support for households in need of support and “vulnerable” industries, with details of this support yet to be announced – however, over two-thirds (78%) of childminder survey respondents and four in five (77%) of nursery and pre-school respondents said they did not believe that six months of support was long enough. In fact, nearly all the providers surveyed called for the early years sector to benefit from additional energy support: in total, 99% of nurseries and pre-schools called for the early years to be included in the government’s list of “vulnerable” business sectors set to receive targeted support beyond the initial six-month period, while 96% of childminders stated that they believed that home-based businesses like childminding settings should be given support for energy costs above and beyond the general energy price guarantee for households.

The survey also found that early years settings have already started to feel the effects of this year’s rising costs. When asked what steps they have had to take over the past year as a result of rising energy costs, more than three in five (62%) of nurseries and pre-schools and eight in ten (81%) of childminders said that they have had to reduce energy usage at their setting, while almost half (48%) of childminders and around two-thirds (65%) of pre-schools and nurseries have already had to increase fees for parents to meet energy costs. 

The survey also found that an overwhelming majority of respondents do not believe that the government has provided enough overall support to help early years manage the sharp increases in electricity and gas prices, with the view shared by nearly nine in ten (86%) nurseries and pre-schools and more than nine in ten childminders (91%).  

Survey respondent comments included: 

• “This sector is already dreadfully underfunded, so the energy increases have added to our financial concerns. We don’t want to raise our fees as our parents are already struggling with the day-to-day cost-of-living.”
• “The importance of early years settings is always talked about by the government; however, they do not seem to consider the essential costs of a setting when they allocate funding. Early years settings are expected to supply care and education of the highest quality, but on the most limited budgets.”
• “I have asked parents to leave a thick jumper and trousers here in case needed. We also limit the energy we use out of business hours and we have the heating turned off in our bedroom so there is more available for the children attending.”
• Looking after children, it is not possible to reduce energy costs in the same way normal households are expected to do. We have to maintain high standards and a safe, warm, healthy environment … We are expected, as part of covid safe measures, to have ventilation permanently, which again results in heat being lost. In order to work to expected, registered standards, our energy usage and costs are high.”
• We're already struggling due to the government’s low funding rates and have to prioritise what we spend and when, without the added worry of rising utility costs to further add to that. Many nurseries have closed and were already under pressure – this is going to cause further closures and letting families down in areas that probably need the childcare the most.”

Commenting, Neil Leitch, CEO of the Early Years Alliance, said:

“Our survey results clearly show that current government support does not go anywhere near far enough to support England’s early years sector through the current energy crisis. 

“We’re only at the start of the winter months and already nurseries, pre-schools and childminders have been forced to reduce energy usage, cut costs and raise fees just to keep their doors open.

“We know that, even before the current crisis, many settings were hanging by a thread as they battled through years of underfunding. There’s no doubt that unless more action taken, rising gas and electricity costs could be a nail in the coffin for many more high-quality settings across the country. 

“As such, it is vital that, at the very least, nurseries and pre-schools are included in the government’s list of “vulnerable” industries that is set to receive further support beyond March, and that government recognises the additional pressures on home-based businesses like childminding settings and provides the additional financial support they need to remain sustainable.

“Early years settings not only provide the childcare that so many parents need to be able to work, but also deliver vital early education for young children, teaching them vital skills that stay with them for life. Now more than ever, it is critical that the government recognises just how precarious a position the sector is in, and ensure that providers receive the support that they need, for as long as they need it.” 

Cover photo from Canva