Smaller nurseries in England are being bought up by profit-focused companies, without necessarily creating more places or investing more in staff, according to a major new study supported by University of East London (UEL) researcher Professor Eva Lloyd.
The report, published today and funded by the Nuffield Foundation, charts changes in early years childcare provision over the past two decades. It shows that large private-for-profit companies are heavily indebted, and their risky financial operating models could threaten the provision of nursery places.
The authors, including Professor Lloyd of the School of Education and Communities, say that the nursery sector is at threat of being damaged in the same way the adult social care sector has been, with care home providers having to close down at short notice.
As part of the study, the researchers carried out interviews and surveys with around 80 nurseries. This included in-depth investigations of the financial operation for five medium to large private-for-profit nursery groups and six not-for-profit nursery groups.
The authors say the findings are 'very concerning', given that the UK Government contributes an estimated £5.6 billion in funds and subsidies to support early years childcare and education in England.
Professor Lloyd said, "Government policy intends for early education and childcare provision to be of high quality and equally accessible and affordable for all families with young children in England. The implementation of these policies is being undermined by structural problems characterising the childcare market. Therefore the public funding model for early years provision needs urgent review."
The findings highlight the stark contrast in the way not-for-profit childcare companies are run, with charitable nurseries supplying transparent accounts to the Charity Commission, compared to the more limited accounts larger private companies need to file with Companies House.
Not-for-profit companies cannot carry substantial debts and must also re-invest any surplus into the childcare business. The report shows that staff costs in these companies could be as much as 14 per cent higher than in the for-profit childcare sector.