Over 500 nurseries and childminders are closing every month, figures show as business rates and childcare policies are blamed.
In the past year, a total of 6,843 providers left Ofsted’s early years register, with nursery bosses warning of a looming “childcare crisis”.
Neil Leitch, chief executive of the Early Years Alliance, said that the “nail in the coffin” for nurseries has been the Government’s flagship childcare policy. Under the policy, working parents who earn up to £100,000 each are entitled to 30 hours of free childcare for three to four-year-olds, which is double the 15 hours they were previously entitled to.
The multi-billion pound taxpayer funded scheme, which came into force in September 2017, was aimed at encouraging parents to get back into work rather than getting put off by prohibitive childcare costs.
But Mr Leitch said that the policy is bankrupting nurseries because the hourly rate they are paid by the Government is far below their true cost, while other costs have increased.
“Business rates and the national minimum wage have increased,” he said. “If you have a hike in the minimum wage, it does impact us because a huge amount of our workforce is on minimum wage, it has a disproportionate effect on a sector that is really low paid. If the Government doesn’t change what it pays you someone has to pick up the tab.”
The Early Years Alliance said unless steps are taken to ensure the sector is adequately funded, there will be a “genuine childcare crisis on our hands”.
Ofsted said that providers have their registration automatically cancelled if they have not paid their fees, so some will be reinstated to the register once they have paid.
They added that the data does not take into account childminders who come off the register and then come back on again at a later date.
A report published last year suggested that free childcare has helped push up nursery costs for families to more than £6,300 a year.
The study by the Family and Childcare Trust found that sending a child in Britain aged under two to nursery part-time, for 25 hours a week, now costs £122 – up 7 per cent on last year.