Busy Bees Blackpool in Lancashire, which employs 30 staff and is registered to take 160 children, including 30 after school, will be wound down in the next two months.
Margaret Randles, Busy Bees' operational director, said, 'We've undertaken a huge amount of research over the past 18 months, and we've put a lot of time and effort into marketing our service. We knew the area was over-provided-for a year ago, and our research has told us that most of the 56 nurseries within a five-mile radius have occupancy issues.'
Busy Bees looked at the number of under-fives in the area and the amount of providers available. It calculated that to guarantee full occupancy for all 56 nurseries in the five-mile radius, it would mean that every under-five in Blackpool would have to attend for five sessions a week.
At its peak, the nursery had 70 or 80 full-time children attending. But over the summer it was forecast to drop to 50.
Ms Randles said that four new children's centres had opened in Blackpool, and the council had recently given planning permission for a new 100-place private nursery in the area.
She said, 'We approached the council's early years department during Phase One of the children's centre plan with a view to becoming part of it. Our nursery was purpose-built and we thought it would be an ideal opportunity to get involved, and also save the nursery and help with revenue funding.
Unfortunately, our plans were not met with approval.'
Sue Flintoff, childcare manager, early years and childcare team, Blackpool Council, said that there had been an 'explosion' of new childcare provision in Blackpool over the past few years - in both the private and maintained sectors. 'From April 2005 to date, there have been 319 new public sector places and 485 in the private, voluntary and independent sectors,' she said. 'Four children's centres attached to schools have opened in Blackpool in the past 18 months.'
Blackpool Council is in the process of auditing the childcare market to find out more about the demand side for parents. Ms Flintoff said, 'We already have accurate information on the supply side. We are now auditing parents to find out what they want and how much demand there is for full daycare in the area. We hope to complete the audit by January 2007.'
Busy Bees management said it would help staff find other positions, either at the company's other nurseries or with other local childcare providers.