Early years providers are, of course, an essential part of the social and economic fabric of our country. However, the coronavirus pandemic has exacerbated the funding crisis in the sector, and I totally share your concerns about the severe challenges facing nurseries, childminders and other early years settings.
Throughout this crisis, early years providers have essentially been asked to take on the responsibilities of schools alongside the liabilities of businesses, and with nowhere near the same level of financial support given to other businesses.
Recent research from the Department for Education shows that around half of all nurseries, pre-schools and childminders are unlikely to be sustainable for more than a year. There has already been a net loss of 14,000 childcare providers in the last five years as a result of the chronic underfunding of early years entitlements. Without urgent action, we could lose at least that many again this year.
At the Spending Review in November 2020, the Government announced it would provide £44 million for early years education in 2021-22 to increase the hourly rate paid to childcare providers for the free hours offers. While I welcome this increase in new childcare funding, I do not believe it is enough to plug the gap, which stood at £662 million last year. It will only come in April, by which time I fear many providers will have closed. The reality is that without better support, and a new approach, thousands of nurseries and early years settings may not have a future at all.
The pandemic has highlighted big problems in the childcare system due to the lack of funding and the rules around early years settings. Our economic recovery will be put at serious risk if thousands of childcare places are lost, and parents cannot work.
My Labour colleagues and I will therefore continue to urge the Government to rethink its plan to cut early entitlement funding from January, and instead to give the early years sector the targeted support it so badly needs.