A new report that assesses towns and cities most at risk from public sector job losses has identified urban areas likely to be hit hardest by the Government's spending review this autumn.
With Whitehall departments facing budget cuts of 25 per cent across the board, the Government is expecting there to be 600,000 redundancies throughout central and local government, quangos and the health service over the next five years.
Unemployment on this scale will obviously have a knock-on impact on support services such as childcare. Early years providers need to be planning now how they will cope.
In the past, recessions have hit communities in specific regions - such as the midlands, north of England and Wales - serving the heavy manufacturing, engineering and construction industries. This time, however, with public sector jobs spread across the country as a result of the previous government's spending programmes, it is not so easy to pinpoint the conurbations set to bear the brunt of the cuts.
The report by the Centre for Cities, an independent policy research institute committed to improving the economic performance of UK cities, identifies the areas overly dependent on public sector employment - and therefore most vulnerable to cuts - as Swansea, Hastings, Ipswich, Newcastle and Barnsley.
The report, Public Sector Cities: Trouble ahead (available at www.centreforcities.org/publicsectorcities.html), says initially the public sector was 'viewed by many city leaders as a cushion to the impact of the recession, but as public spending falls, so too will public sector employment'.
According to the report, 'The public sector is a big employer in UK cities, on average providing more than one in four jobs. Nationally, over seven million people are employed in public sector activities.'
The vulnerability of a city will depend on the final decisions by chancellor George Osborne in October, but report author Kieran Larkin reckons that communities with a high proportion of non-expert, non-professional public sector jobs are most at risk.
Childcare sector providers are coping with job losses by maximising potential (see Swansea case study below) and expanding where the market shows opportunities for growth.
Reasons to be cheerful about nursery sector
Courteney Donaldson, director of child-centric sectors at brokers Christie, says the market for nurseries will remain strong, depending on a number of factors, including: location, ie if they are in areas which look to be safe from public sector job cuts; or if the nursery is well-established, has always traded well, has good occupancy rates, a 'good' or 'outstanding' Ofsted report; and has high quality staff.
Ros Marshall, chief executive officer of Kids Unlimited, says, 'Both our summer openings of nurseries - at Highbury in London and Timperley in Cheshire - have generated significant amounts of interest from parents, due to our policy of creating purpose-built nurseries where possible and ensuring that we fully research the local markets.
'We aim to work closely within the communities, as we believe that a nursery should be an integral part of the neighbourhood. Although the geographic and demographic area of these two nurseries is very different, we have approached them individually to ensure local support for a high-quality children's day nursery.
'All our nurseries are built to match our company's vision of "creating environments where all our people and children can flourish". Investment in buildings, resources, training and equipment has meant that these new nurseries are designed to meet the needs of our parents and children through delivering high-quality care and education for each family.'
While both Timperley and Highbury are affluent areas and safe from widescale public sector cuts, Ms Donaldson suspects the settings most at risk are children's centres in deprived areas. 'In these areas, families are likely to see their incomes reduced because of benefit changes,' she says. 'At the same time, many of these settings pay quite racy wages in comparison with the private sector and have only been surviving on sustainability grants, which will go out of the window when cuts kick in.'
Ms Marshall accepts the unsettled outlook. 'We might well not see the October spending review and the spending cuts having a significant impact until next year. Things take time to work through. However, in January, VAT goes up - so that will have an impact at about the same time as the spending cuts begin to hit.'
Fail to plan? Plan to fail ...
Swansea - identified as 'most vulnerable' in the Centre for Cities report - has seen redundancies over the past 18 months, with losses in banking and call centres and the closure of one of the Land Registry's two sites there.
The two settings owned by Highgate Day Nurseries and Pre-Schools have coped, because proprietor Julie Halliday and operations director Jayne Lewis planned ahead. The recession has resulted in more parents opting to have part-time places and sharing their childcare between nursery and grandparents. 'We have to be more flexible,' says Ms Lewis. 'Fewer full-time places are taken up. In Swansea, we do not have the option to offer funded places for three-year-olds. They have to go into school.
'We do pick-ups after school and bring the children back here and try to be as flexible as possible. We have been getting more babies booked in recently. Mothers who had been planning to take the full year maternity leave are returning to work sooner. Mothers planning a career break are also returning to work.
'In some cases, people are worried their job might be made redundant. Although they should be treated the same when they are on maternity leave, they often choose to stay on in the office to keep an eye on things.
Or maybe the husband's job is not stable and they need the security of two incomes.'
Highgate had the contract to provide childcare for employees at the Land Registry site where the closure was announced last year. The nursery was not too badly affected, however, as few of the parents taking redundancy had children of nursery age.
'We were warned about it and had time to plan ahead. It would be much harder if an employer closed down with immediate effect. Land Registry gave staff a year's notice. The whole process took about 12-18 months. The big public sector employers have lengthy consultation periods when redundancies are being announced, which gives people time to plan.'
Highgate has also explored ways to extend its business by developing the services it offers and maximising its facilities. The setting next to Morriston Hospital is housed on the ground floor of a large former coach house. The first floor has its own separate entrance and is equipped with toilets and a dance studio, but was only used for storage. Now it is used for baby massage classes and dance classes, to attract new people to the setting.
'The baby massage classes are for very young babies - too young to start with us, but the classes are bringing them here. Their parents see how lovely the nursery is and they want to start their child at nursery.
'I lived through a recession at the start of my career and I may well see another one before I retire. You just have to keep looking ahead to see what opportunities there are - and how you can adapt,' says Ms Lewis.
'One of the biggest problems is debt. People are told on a Monday their job is going to be gone by the Friday and they are not eligible for redundancy pay. We have had to get stricter about when fees are paid.'
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