Childcare providers battle low occupancy and funding deficit

Childcare providers are facing significant losses as low occupancy and funding shortfalls hit sustainability, finds latest analysis by Ceeda.

As of 8 June, early years providers in England were operating at average occupancy levels of just 37% based on data collected through Ceeda's Covid-19 tracker research. this compares with 77% in spring 2019.

If the take-up of childcare places continued at this level on average over the next 12 months, providers would face estimated losses of £3.63 per funded two-year-old child per hour (a funding shortfall of 68%), and £2.53 per funded three- and four-year-old child per hour (a funding shortfall of 55%). 

In the unlikely event that occupancy recovers to the April 2019 average of 77%, the sector still faces big challenges: the average gap between the hourly cost of delivering a funded 2 year old place and the funding rate paid for that place in 2020/21 is still an estimated -£2.01 per hour (a 37% funding deficit), falling to a loss of -£0.90 per child per hour for 3 to 4 year olds (a 20% funding deficit). This is due to continued under-investment in 'free' childcare entitlements.  

Jo Verrill, managing director of Ceeda, said:

“The coronavirus pandemic has delivered a powerful reminder of the importance of early education and childcare in all its facets, from the base need to keep vulnerable children safe from immediate harm, to giving every child and adult the opportunity to reach their full potential in education and work.

“There is much rhetoric on the importance of a child’s early years. Now more than ever, this must be matched by investment, if we are to protect the country’s vital early years infrastructure.”

Read the full bulletin HERE.