Maintained nursery schools are facing a “perfect storm” in the wake of the Covid-19 crisis, with only 10 per cent confident they can carry on with current funding levels, a new report reveals.

A third of maintained nurseries were in deficit at the end of 2019-20, and even before the pandemic only 51 per cent expected to balance their budgets in 2020-21, according to a survey by the Early Education charity and the NAHT, NEU and Unison unions.

Now, as a result of increased costs during the crisis and the loss of income from parental fees, only 28 per cent expect to balance the books at the end of the current financial year, the organisations found.

Related: Halt ‘unnecessary’ nursery school closures, campaigners say

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The sector was relieved to learn in October last year that supplementary funding would continue to protect maintained nursery schools in 2020-21.

The announcement followed a major campaign to secure the future of England’s maintained nurseries after their supplementary funding was due to end in March 2020.

Now fresh concerns have been raised in the wake of the Covid-19 pandemic.

The organisations highlighted the fact that England’s 389 maintained nursery schools have been unable to access some government sources of support such as the business rates holiday over the course of the pandemic.

This was despite the fact they were “twice as likely” as private providers to have stayed open during the crisis, they said.

And there is “limited remaining scope for cuts”, the organisations warned.

Their survey, which received 133 responses on behalf of 144 maintained nursery schools, carried out in August and September 2020, found that three quarters (75 per cent) of respondents had already reduced teaching staff to minimum numbers.

As a result of the pandemic, respondents reported an average loss of parental fee income of £36,000 and additional costs of £4,000, “putting further strain on already stretched budgets”, the organisations said.

Other findings from the survey included:

• 71 per cent of respondents had frozen vacancies or made temporary instead of permanent appointments
• 57 per cent were already staffed at minimum ratios - others commented they were above the minimum only because of the high number of children with SEND requiring additional staffing
• 46 per cent already had a less than full-time headteacher, e.g. due to federation or a part-time teaching load 
• 24 per cent were facing financial challenges due to linked children’s centres being closed or having budgets cut
• 38 per cent were already discussing or expected to need to discuss the possibility of closure
• 40 per cent were facing cuts to staffing or services
• Only 27 per cent confirmed they had been able to access funding via the CJRS [Coronavirus Job Retention Scheme]
• Only 10 per cent were confident they could operate within existing funding levels

Maintained nursery schools are more expensive to run than other early years providers, the organisations said, because they must “cover the cost of being schools with a headteacher, qualified teachers, and admissions policies that prioritise the most vulnerable children”.

They said the Department for Education (DfE) “has yet to propose a viable long-term funding formula for maintained nursery schools to replace the stop-gap arrangements put in place in 2017”, and called on ministers to take “two crucial steps”. These are:

• to put in place as a matter of urgency a long-term sustainable funding formula for maintained nursery schools; and
• to ensure that the additional costs and loss of fee income from the pandemic are addressed by support measures until at least the end of the current financial year.

A DfE spokesperson said: “We recognise the importance of maintained nursery schools and the valuable services they provide, particularly in disadvantaged areas. We have made significant financial support available to all nurseries, including maintained nursery schools, throughout the pandemic and the Coronavirus Job Retention Scheme is still available to them.

“We are providing local authorities with around £60 million this year for their maintained nursery schools, in addition to the funding they receive for the early years education entitlements. We will set out longer-term funding arrangements for maintained nurseries schools in the Spending Review.”