ALMOST one in three nurseries in East Lancashire is at higher than average risk of failure, new figures suggest.

Statistics from the restructuring and insolvency trade body R3 show that 32 per cent of nurseries in the North West – equivalent to 153 businesses – are considered at above average risk of becoming insolvent in the next 12 months.

The latest figures are published as the sector adapts to the introduction of free childcare for three and four-year-olds on September 1.

The Government has pledged to fund 30 weekly hours of free care during termtime but nursery operators say the funding provided doesn’t cover the full cost.

The Pre-School Learning Alliance surveyed around 1,400 childcare settings in August and 38 per cent of responders said they didn’t think their setting would be sustainable in 12 months.

Paul Barber, the North West chair of R3 and a partner at Manchester-based Begbies Traynor, says: “Nursery operators are under pressure from rising costs and inflation, and some have been affected by changes in business rates.

“The impact of providing free places will create further challenges for the sector.

“We’ll have to keep a close eye on the insolvency risk statistics in the coming months to see what impact free childcare has.”

While many nurseries have been reluctant to opt out of the scheme for fear of losing pupils, others have limited the times parents can use their free allowance and are charging for extras such as meals.

Mr Barber, who lives in Rossendale, added: “With employment at its highest level for around 40 years, nurseries play an important role in supporting working parents.

“Operators must carefully monitor the impact of the new scheme and take steps to address any shortfall to ensure their business remains sustainable.”