The vast majority of day nurseries and pre-school settings are now open but occupancy levels have dropped © Handout

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Parents in the UK are reducing their use of formal childcare as the pressures on household budgets mount, working practices change and anxiety over job security rises.

The vast majority of day nurseries and pre-school settings are now open, but occupancy levels — which rose steadily after lockdown measures eased in June — had flattened out at about 60 per cent of capacity by the end of September, according to surveys by the research provider Ceeda.

With many childcare providers already under intense financial strain, the drop in demand is driving increasing numbers out of business — a trend that could have lasting effects on the UK economy if it limits parents’ ability to work and children’s life chances.

“It’s foundational for the economy. It’s not just another industry,” said Kate Hardy, an associate professor at Leeds University Business School, adding that childcare closures in deprived areas shut out the children that benefit most from early years education, reinforcing social and economic inequality.

There is a stark divide between nurseries in prosperous locations, where remote-working parents swiftly sent children back in order to stop juggling Zoom calls with Play-Doh and puzzles, and those in poorer communities where more parents have lost work or do not want to risk infection as they cannot afford to take time off to self-isolate.

Almost a fifth of settings were operating with at least two-thirds of their capacity vacant at the end of September, Ceeda found, while a smaller minority had high occupancy of 86 per cent or more.

Some families are sending children in for fewer sessions and no longer need long hours to cover commutes © Handout

“It’s been a really mixed bag,” said Zoe Raven, chief executive of Acorn Early Years Foundation, which runs 13 nurseries in and around Milton Keynes. Some had been almost unaffected, she said. But one, close to Unilever’s research and development centre, whose staff have been told to work from home at least until January, was almost deserted.

Even providers catering to professionals on London’s leafy outskirts have seen a drop in demand. Several said families were sending children in for fewer sessions and no longer needed long hours to cover commutes; while some said new mothers were extending their maternity leave — possibly through fear of being made redundant on their return.

Anthony Ioannou, managing director of Abacus Ark Nursery Schools, said he might need to rethink a business model “tailored for City workers . . . requiring a minimum of four days a week” as parents wanted fewer days, either due to new working habits or because they were “watching their pockets”.

“Childcare is an expensive business. If you think there may be other ways of doing it that benefit your finances and the family, they will be doing it,” said Ruth Pimentel, chief executive of Kindred Nurseries, a chain operating in London, Essex and Wiltshire. She felt parents working from home — now used to juggling care and work with their partner — would use less formal childcare “at the margin” in future.

But childcare providers serving deprived communities have seen a much bigger drop in demand — hitting those with most to gain from pre-school education.

When children came back after the lockdown, problems with obesity, language development and behaviour had worsened, and some did not have clothes to suit the weather, according to June O’Sullivan, chief executive of the London Early Years Foundation, which runs 39 nurseries, with 40 per cent of places subsidised for disadvantaged children.

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She raised funds to offer free places to families who were “in dire need”, while giving more flexibility to parents working freelance, who were struggling to afford childcare, but needed it to free them to find work. She also supplied shoes and coats and sent some families recipe packs — presented as a kit for home learning, rather than a handout.

“Childcare is more than ever part of our national infrastructure now,” she said. “Children who are disadvantaged get a good leg up.”

The danger now is that some poorer areas could be left without access to early years education, because providers already on the brink have lost fee income and fear losing state funding for a 30-hour entitlement for three and four-year-olds next year if demand does not recover.

The Department for Education agreed this year to continue “block-buying” childcare places at the level they would have funded before coronavirus, but has not yet said what it will do if occupancy is still low in January, when funding for the next year is set on a per capita basis.

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Successful chains — many of them backed by private equity — are still expanding, snapping up staff who have lost jobs at weaker providers, but they are unlikely to invest in areas where few parents can pay fees.

“The government is prepared to allow the infrastructure of early years education to go by the wayside, just because there is a contraction at the moment in terms of need. What about in a year’s time, in two years’ time?” said Neil Leitch, chief executive of the Early Years Alliance, a membership body that also runs childcare facilities in deprived areas. Two years ago, they had 180 settings; now 65 are left.

“We know we will come out the other side,” said Ms Pimentel, whose business is under private equity ownership, and was able to open fully from June. “A lot of nursery groups are family-owned and have invested every penny they’ve ever got . . . they have no easy access to the cash you need to weather the storm.”

New working practices hit nanny numbers

Lockdown was “quite chaotic” for nannies, said Tricia Pritchard, managing director of the British Association of Professional Nannies. Some nannies quit — or were dismissed — because of rules on mixing households. Others felt under pressure to move into their employers’ households.

As the rules relaxed, things “calmed down”. Yet the rise of remote working among professionals has had an impact on nannies’ working patterns. Ms Pritchard has observed some employers cutting back on hours, more adverts for part-time posts and job shares as well as changes in role definitions. “Parents are wanting nannies to be the housekeeper as well.”

She expects a clearer picture of the nanny jobs market to emerge in the new year. “Two things could happen — nanny employers continue to work from home and might review their childcare needs. Another is that employers will [lose] their jobs.”

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