NDNA challenges fairness of CMA plans to investigate nurseries 

Nurseries and childcare providers are being unfairly singled out for investigation by the Competition and Markets Authority (CMA).Competitions and Markets Authority logo

The CMA has highlighted the childcare market as one of the areas of concern in the way consumers have been treated during the Coronavirus crisis.

Between government underfunding, insurance cover challenges and fixed costs, nurseries are being placed in an impossible position with many having insufficient income to keep their businesses open. While other areas for investigation are in the leisure sector, nurseries and their staff are providing emergency childcare for critical workers and vulnerable children.

Based on complaints received by the CMA, it has identified 3 areas of particular concern:

  • Weddings and private events
  • Holiday accommodation
  • Nurseries and childcare providers

In most cases, the CMA would expect a full refund to be offered to consumers if:

  • A business has cancelled a contract without providing any of the promised goods or services
  • No service is provided by a business, for example because this is prevented by restrictions that apply during the current lockdown or
  • A consumer cancels, or is prevented from receiving any services, because of the restrictions that apply during the current lockdown.

Purnima Tanuku OBE, Chief Executive of NDNA, said: “Nurseries are being put between a rock and a hard place during this crisis. They are being asked to remain open and run at a loss to provide emergency childcare, while those who can’t open still face staffing and other costs which the Governments support doesn’t fully cover.

“As a result of a lack of insurance cover, delays to Government support schemes and chronic underfunding of childcare places we know that some nurseries have asked parents for contributions to keep their businesses afloat. 

“Nurseries as consumers have their own concerns especially about how insurance cover is not working for them and leaving them exposed to losses. We have also raised concerns with the CMA previously about Government funding not paying a competitive rate which is affecting the childcare market and pushing them to the brink. Before this crisis more than half were only breaking even or running at a loss.

“If nurseries don’t have the income to cover their ongoing costs then they won’t be able to re-open when parents come to going back to work. If these measures - combined with a lack of Government support - force more nursery closures it will be the families and children who will suffer in the long term.

“NDNA will be presenting evidence to the CMA about financial pressures on nurseries and childcare providers face due to chronic underfunding.”