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Cambridgeshire nurseries facing bleak financial future because of furlough rules

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Government-funded nurseries could see a hole in their finances (34531046)
Government-funded nurseries could see a hole in their finances (34531046)

Concern is growing for the financial viability of nurseries and other early years education providers following “mixed messages” in the government’s Covid-19 furlough scheme.

Cambridgeshire County Council’s children and young people committee was told on Thursday (May 7) that a change to the government’s furlough arrangements for early years settings has had a significant impact.

The original message - that all staff could be furloughed - was changed so that only the part of a staff members’ wage that was not already paid using government education funding would be reimbursed.

This has left some nurseries and providers with no income from caring for children, but a proportion of wages still to pay.

The issue was raised by the leader of the Liberal Democrat opposition group, Cllr Lucy Nethsingha, who told the committee she has huge concerns over the financial viability of the county’s nurseries, pre-schools and other early years settings as a result of “mixed messaging” from the government.

Cllr Nethsingha said: “I believe what happened was that at the outset of this lockdown, early years settings were told that they would be able to furlough their staff, and then later on they were told that they were only able to furlough their staff for the part of their salary that was from private income rather than government income, and that’s a really different amount of money.

“And many settings had closed on the basis of the first advice, because they had thought that they were able to furlough their staff, and they are now in a really difficult financial position because they are not going to be able to get that money back from central government, but they are also not getting any money in because their children are not there.

“There are clearly some quite serious consequences for the county if a number of our early years providers go out of business as a result of that mixed messaging and as a result of the financial difficulties that this is going to put them under.”

She added it was a “major problem”.

Jonathan Lewis, the service director for education for Cambridgeshire County Council and Peterborough City Council, said the issue is “one that’s really worrying us”.

He said: “The original furlough scheme was supportive of early years being able to furlough all their staff, but a subsequent update that came through meant that early years settings were only allowed to furlough the proportion of staff that related to private income. And that has had some quite significant impact on those providers out there who made those upfront decisions.

“We have made quite strong representations to the department for education. It’s one of the issues that we have still got outstanding from them about the impact it has. It has had a differential impact across many different types of settings, which is of concern to us.”

A county council document on the issue says: “We have continued to provide full funding to all early years setting in Cambridgeshire throughout this current period, but financial viability of our settings going forward is going to be a key consideration.”

A Department for Education spokesperson 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.”

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