Research by nursery equipment suppliers The Consortium, exclusively for Nursery World, found that more than a third (37 per cent) of owners said the biggest threat to their business was parents no longer needing childcare because they had been made redundant.
Bad debt as financially-strapped parents struggled to pay nursery fees was the second biggest threat to sustainability.
Brian Potter, The Consortium's sales and marketing director, said, 'This is clearly a widespread practice which threatens early years settings' survival. Many of our respondents are calling for a direct payments systems to be introduced.'
One third of respondents wanted direct payments for tax credits to stop debtors who fail to pay their nursery fees.
Anne O'Mahony, who owns Farlea Childcare, out-of-school and holiday clubs for three- to 11-year-olds in Staffordshire, said, 'We know which parents use tax credits and we've noticed over time that a lot of our late payers we have to chase for payments are parents who get tax credits. This can be a lot of money for a small business in the current climate.'
The survey shows that the recession is having a mixed effect on nursery businesses.
One third of respondents said the economic downturn was having no impact and just under a half said it was too early to say if it was causing an adverse effect on their business.
Linda Rodney, owner of the Children's Nest Nursery in Hertfordshire, said, 'Our new nursery has been overwhelmed. It has been open for six months now and is doing very well.'
THE SURVEY'S FINDINGS
- What support do you feel you need in an economic downturn?
Direct payments for tax credits 29%
Increased funding for early years entitlement 62%
- In the past six months have you seen your occupancy levels:
Increase 37%
Decrease 16%
Broadly stay the same 47%
- What are your plans for setting nursery fees?
We're freezing fees 18%
Raising fees but less than planned 31%