A survey of NDNA members on business performance in the sector found that 65 per cent of nurseries have seen occupancy decreasing in the six months to November.
Eighty-four per cent have had more part-time children in their nurseries, and 56 per cent said there had been an increase in parents using only the free entitlement.
Just under two-thirds of nurseries put their fees up in 2011, with providers passing their own increased costs in wages, food and utilities on to parents.
Nurseries were also asked about whether they had noticed any payment trends in the past year. A third reported that parents had been late with payments. One in five said they had noticed that more childcare vouchers were being used.
One owner said, 'Debtors have increased to such a level, I've employed a debt collection agency for the first time.'
Another commented that parents were slower to pay, did not always give the notice period required when a child left, or quit without paying the final bill.
The survey also reveals the impact of local authority cuts on nurseries, with just under half reporting a loss of support and training from their council.
Subsidised and free training and funding to support salaries for EYPs have also been 'reduced significantly' (see table).
Just over a third of nurseries described their local authority as unsupportive.
When asked what LA support they would benefit from, nurseries highlighted more free/subsidised training (27 per cent); sufficient funding for free nursery places (19 per cent); and a reduction in business rates (7 per cent).
Chief executive of NDNA Purnima Tanuku said, 'The decline in occupancy is worrying but could reflect the rise in female unemployment, as mothers who may have been made redundant are now staying at home to look after their children.
'While we appreciate that local authorities are having their budgets cut, it is important they still invest in early years to ensure high-quality provision for children and families. Government can help with this by ring-fencing money meant for early years in the Dedicated Schools Grant.'
WHAT NURSERY OWNERS SAID
Changes to hours
'We are looking at earlier opening and later closing times as well as potentially opening on a Saturday.'
'Costs are just too high to extend our opening hours.'
'We are hoping to extend our nursery day and offer before- and after-school care.'
Support from banks
'We used to have twice-yearly meetings with our relationship manager at the bank, but we have not seen or heard from them in 18 months.'
'There is limited support for short-term cash flow issues.'
Two-year-old funding
'Nurseries need experienced staff to offer these places, as there are some very needy families.'
'Plenty of demand, not enough funding.'
'We will be willing to continue to provide places if the cost is fully covered and there is not an erosion of three-to-five-year-old funding.'
'The hourly rate does not cover additional time spent in meetings with parents and social workers.'
'Good in principle, but there needs to be an increase in funding to enable providers to offer the quality of provision required to really make a big difference.'