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Nurseries are “on the brink of collapse” due to a holes in the coronavirus emergency wages scheme and mass closures loom, Labour has warned.
Shadow education secretary Rebecca Long-Bailey accuses ministers of rowing back on promises to protect jobs normally supported by the government’s “free childcare” scheme.
Nurseries were assured when Boris Johnson announced Covid-19 restrictions in March that they would be able to keep claiming “free childcare” money in addition to cash through the coronavirus job retention scheme to cover rent, wages and bills.
But on Friday it emerged that childcare providers would only be allowed to claim furlough cash for the amount of private work they do – which may not be very much and leaves many operating at a loss.
Free childcare sees the government foot the bill for up to 30 hours’ care for about 1.3m families. Scores of nurseries, many of which are staying open to look after key workers’ children, heavily rely on it.
It is thought the government is aiming to avoid double funding parts of the economy by limiting the amount of furlough cash available.
In a reply sent to Long-Bailey, seen by HuffPost UK, education secretary Gavin Williamson said that there was now an “expectation that employers do not receive two public funding streams”.
But fears are spreading that thousands of nurseries will hit the wall as they are left only able to claim salary costs for a small proportion of their overall workload.
Long Bailey has written to education secretary Gavin Williamson calling on him to reverse the decision.
In a reply to the Labour frontbencher, Williamson said the government was providing a “range of support” for early years settings.
He confirmed nurseries could not claim free childcare scheme costs and furlough staff as it would mean providers get double funding.
“The expectation that employers do not receive two public funding streams to pay the same staff costs applies universally,” he said.
The minister did not rule out revisit the funding model, adding: “These are rapidly developing circumstances and we continue to work closely with HM Treasury to monitor how the support packages are benefitting organisations and to consider any further action which may be required.”
Long-Bailey urged him to act fast as, with the government estimating some 57% of nurseries closing down due to the lockdown, parents could be left with fewer childcare places available once the UK reopens for business.
“The childcare sector is on the brink of collapse, in part because of the government’s U-turn on nurseries’ ability to use the furlough scheme,” she told HuffPost UK.
“We are hearing first-hand from nurseries that they cannot survive this crisis and will have to make redundancies or close their doors.
“The government must overturn their decision and allow childcare providers to access the furlough scheme in full, otherwise there may not be many childcare places left on the other side of the crisis.”
The guidance issued April 22 says “organisations which continue to receive government funding should not furlough staff whose salaries that funding could typically be considered to fund”.
A spokesperson for the Department for Education said: “Nurseries, childminders and all other early years settings are playing a vital role in the response to coronavirus, by supporting critical workers and parents of vulnerable children with continued childcare.
“We have provided continuity in funding for the free childcare entitlements, and the government has put in place a significant package of financial support for providers – this includes the Coronavirus Job Retention Scheme, which providers can access for employees whose salary is not covered by public funding. This principle applies universally across all sectors.”