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The number of childcare providers going bust has nearly doubled in the last year due to the “soaring costs” of childcare, accountancy firm Moore Stephens has claimed.

 

29 providers closed down in England and Wales in 2015/16, compared to 16 in 2014/15. Factors involved in these decisions included the introduction of the national living wage, high staff:child ratios and government administration costs.

 

Neil Leitch, chief executive at the Pre-school Learning Alliance, said that it is sadly not surprising that the number of childcare providers going out of business is on the increase.

 

“Rising business costs such as mortgages and rents, insurance, utilities and of course wages, are always going to put significant pressure on early years providers,” Neil said.

 

“Without sufficient government funding for the free entitlement scheme, which the vast majority of providers offer, it is inevitable that a growing number are going to struggle to stay afloat.”

 

The 30-hours pilots are due to begin next month, and with the scheme due to fully roll out next year, Neil said that it will then be even more difficult for providers to make up for their shortfall in funding.

 

“While high staff:child ratios are of course a cost driver, compromising on the quality of provision by relaxing ratios is not a solution and has been comprehensively rejected by the sector,” Neil said.

 

“If the government wants to build a quality, affordable, sustainable sector, it simply must invest what is needed. If it doesn’t, we are likely to see many more provider closures over the years ahead.”

 

The DfE has launched a consultation into three- and four-year-old funding, due to conclude at the end of September.