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A Sheffield nursery boss has warned that childcare providers will continue to close "left, right and centre" unless the years of "gross underfunding" is addressed.

For the first time, latest Ofsted figures have shown the amount of nurseries in Sheffield closing has surpassed those opening as the industry has continued to battle against underfunding, rising costs and declining staff retention.

Dr Sipra Deb, managing director of eight nurseries, including Sheffield’s Seeds to Stars Nursery and Frecheville Children’s Nursery, described the sector as "undervalued", leaving nursery owners questioning "how can we survive?".

Dr Sipra Deb, owner of eight nurseries including Sheffield's Seeds to Stars on Little London Road has spoken out about the pressures facing the childcare industry.

In Sheffield, a total of 177 childcare providers on non-domestic premises, such as nurseries and pre-schools, closed between August 2014 and August 2023, Ofsted data has revealed.

Private nurseries receive funding through fees paid by parents, and through Government funding of the "free early education". The Department for Education provides guidance for the allocation of this funding, but it is local authorities, such as Sheffield City Council, that decide the final rates of these 'free' hours.

These rates are worked out according to the Early Years National Funding Formula (EYNFF), and then paid directly to the provider by their local authority. However this rate is often significantly lower than the costs to run the business, meaning that providers have to increase private fees and charge for extras such as meals just to break even.

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Dr Deb said: "We're literally firefighting, working out where the next penny comes from, which bill we've got to pay and which staff member hasn't come in. It’s not been an easy ride. I can’t seem to see a gap where I think things are actually getting better."

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Dr Deb opened her first nursery in 2017 during a time in which she said the sector was experiencing "gross underfunding", with childcare funding rates that "didn’t necessarily translate to the cost of delivery".

She said that the knock on effect from that is that, despite years of studying, staff in childcare are generally paid minimum wage "because there just isn’t the money there".

Nursery owners such as Dr Sipra Deb are facing difficulties in staff retention due to "gross underfunding" of the industry.

Across her eight nurseries, Dr Deb says she is currently looking to recruit around 15 people - but while one vacancy used to see "80 to 90 applicants", she now receives between three and zero. Some of those who apply are often not qualified.

She said: "Those who are in childcare are really passionate and have chosen this as a career. It's not just a wage for us, it's a career that we've actively chosen to be in. But these are also people who are wanting to have families, settle down and be able to afford a mortgage.

"There is no incentive, and providers are finding themselves in a very, very difficult position where they’re not able to pay the going rate that staff deserve. Hence, people have left the sector.

"We now have a situation where we have a massive imbalance of being able to try and recruit in order to fill the gaps, so even nurseries that may have spaces cannot fill them as they do not have the staffing."

Childcare providers joining and leaving Osted in Sheffield
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While there have been a number of closures of childcare providers in Sheffield over the last six years, data has shown that the number of places at non-domestic premises has increased by 9.7 per cent to 9,100 places between August 31, 2016 and August 31, 2023.

But the Government’s new initiatives of expanding 15 hours of free childcare to two-year-olds as of April 2024, and then nine-month-olds in September, is likely to see an increase in demand for childcare.

Dr Deb does not believe that it will be feasible in the current conditions of the sector. She said: "The truth of the matter is there are not enough settings and not enough places to be able to take the increase in uptake of the funding.

"It is well known and documented that ages zero to five is probably the most important stage of development in a person's life, and we are at the forefront of that - and this sector is in crisis.

"I feel like nursery owners do need their voices heard. We are just trying to help, we are here providing a service for what is your most precious possession."

Councillor Dawn Dale, chair of the Children, Education and Families Policy Committee at Sheffield City Council, said: “Early years providers across the country are grappling with a number of challenges, including the financial strain of escalating costs and insufficient funding.

“These difficulties are compounded by workforce shortages and on-going complexities of adapting to ever-changing education and regulatory landscapes.

“The funding provided by the Government to support early years varies across local authorities, leading to disparities in financial assistance for childcare providers and we have raised this issue with ministers.

“Demand for places on our early years providers is increasing but money we currently receive from the Government to fund this vital area is not enough although we work hard to continue to meet that demand.

“So in recognition of the rising costs, the council will not be applying the 5% permissible allocation to cover expenses for two-year-olds but instead 100% of the funding received from the Government will be allocated to childcare providers in the city.

“We understand the changes to the childcare payment structure are concerning for providers and will continue to work with to ensure we can provide the best level of early education and support for Sheffield’s children."

The Department for Education has been contacted for comment.

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Sheffield childcare: Nursery boss warns sector is in 'crisis' after years of 'gross underfunding'

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