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Commenting, Neil Leitch, Early Years Alliance chief executive, said:

“It is inconceivable that at a time when the government’s own figures show ever more childcare providers are barely keeping their heads above water, it would decide to return to funding early years places based on actual attendance. How exactly does the government expect settings to remain open when their bills come in, but their funding does not?

"Providing ‘some’ support on a case-by-case basis simply is not good enough. We know that nurseries, pre-schools and childminders are still seeing significant reductions in the demand for places, which is having a hugely detrimental impact on their income. With the government admitting just last week that it has been overestimating childcare attendance – and its own report today which showed private fees have fallen drastically - it is simply unbelievable that they have taken this decision, and worse still, given providers so little notice of a potentially substantial fall in income.

"The government knows all too well that things aren’t going to be returning to normal for some time - why else would it announce yet another extension to the furlough scheme today, an extension which by definition will prolong the period for reduced childcare demand? There is simply no justification for making such a short-sighted and damaging decision.

“With early years settings also experiencing other huge drains on their finances, such as the costs of enhanced cleaning, PPE and other supplies, and the impact of an increased need for staff cover, this is likely to be the final straw for many.

“The way the government has treated the early years sector throughout this crisis has been utterly shameful. The government must urgently reconsider this decision – or risk causing the closure of thousands of early years providers over the coming months.”