The plan to concentrate a wide range of services, including childcare, in clusters of extended schools lies at the heart of the recent Government Green Paper, Every Child Matters, and has the potential to redraw the childcare map in England.
The first 61 sites for extended schools, which will also offer health and social care, lifelong learning, family support, sports and arts, have already been identified and the Government aims to have at least one in each local education authority by 2006.
Nursery chains, which in some areas are already facing falling occupancy levels because of over-provision, must decide whether to embrace the Government's latest initiative. Should they regard this as a commercial opportunity for expansion or a threat to their operational strategies?
Rosemary Murphy, chief executive of the National Day Nurseries Association, says that notwithstanding potential legal wrangles over ownership, 'Anybody looking to develop their market needs to be looking at schools. It would be foolish to ignore it.'
She emphasises that such an orientation would have to be 'led from the top of a chain rather than being left to individual settings' and that 'it will require careful management'.
Asquith Court has already dipped its toe into the arena of school-based childcare through its alliance with Jarvis to develop nurseries alongside new-build or refurbished schools under the Private Finance Initiative (PFI). With the first two of its four nurseries on school sites now open and more projects on the way, director Peter Aughterson says, 'What we are doing fits in neatly with what the Government is doing. But the Government has had lots of initiatives over time and I don't think any nursery group should formulate a strategy just based on that approach.'
He says that the way schools are structured made it difficult to do deals with local authorities, but the Government's emphasis on PFI as a means of developing school sites gave Asquith Court a route into this market.
Michael Fallon, managing director of Just Learning, says the chain has been approached to take part in several PFI projects to create nurseries in schools, 'But nothing has yet materialised'.
Already heavily involved in providing nurseries for hospitals, he says chains should not be 'bamboozled' by the prospect of building nurseries in schools. The bidding process can be time-consuming and some of the leases on offer have been for as little as five years. 'That's far too short in commercial and educational terms,' he warns.
Two of Just Learning's nurseries - in Stevenage and Cambourne, Cambridgeshire - are sited close to schools, more by accident than by design. 'It's hard enough to find suitable sites, so you locate where you can without waiting to position a nursery next to a school,' he adds.
With four- to five-year-olds already 'raided' from the private nursery sector by schools, Mr Fallon foresees 'a danger that they may move further down the age range'. It's a fear shared by Stewart Pickering, director of Kidsunlimited, who says, 'Obviously we have a vested interest here and we regard the drive to take two- to four-year-olds into school as a threat.
But we believe that children at that age should be in the more self-contained nursery environment, with smaller groups and higher staffing ratios.'
But he concedes, 'The concept of linking with schools to provide the interface between care and education is a strong one and we are looking at it. We'll be assessing how the schools look like developing.'
Alan Bentley, chairman of the Childcare Corporation, echoes the same commercial and philosophical concerns. He says that staffing ratios mean they lose money on every baby and rely on making money from older children.
They will suffer if more of the older age group are moved into schools. 'In such a situation the only way in which the private sector can commercially swing back into balance is to raise fees,' he says.
While the Childcare Corporation has been asked to put a nursery in grounds shared by a secondary and primary school, Mr Bentley remains sceptical of the Government's plans for extended schools, regarding them as 'a slightly insidious attempt to incorporate childcare within the school curriculum'.
He says, 'From my reading of the Green Paper what the Government is after is an absorption of childcare into the school system. I do wonder to what degree it is a political argument rather than an educational one.'
And he shares Mr Pickering's misgivings, warning, 'If you institutionalise childcare through a school you are entering a structure that deals with the process of formal learning rather than the process of development.'
Jan Kidd, north-east region childcare manager for the Tyneside-based Childcare Enterprise, takes a more pragmatic view, regarding the Green Paper proposals 'as an opportunity for private providers which they can't afford to miss'. In purely practical terms, she says, 'It would be wonderful for parents if they didn't have to worry about their children being picked up from school and being taken to another service elsewhere.'
She says the chain, which has a string of workplace nurseries, already provides a service to schools as it has helped set up out-of-school care by giving administrative support for applications to the New Opportunities Fund.
While chains ponder the educational value of the Government's plans for extended schools, the overriding consideration will be the concern that the private sector's market share will be further eroded if the initiative takes off.
Ms Murphy warns, 'Some schools could develop childcare services that will impact, particularly on smaller providers, especially in areas that are already quite saturated with provision.'
The DfES tried to tackle this issue in its guidance on extended schools. It states, 'The provision of childcare by schools should link into existing provision in the local community. Schools should represent a new source of childcare, rather than undermining or replacing existing community or voluntary groups.'
The guidance makes no specific reference to the private sector here, but adds, 'During the consultation process, schools should talk to local childcare providers, perhaps with a view to working in partnership in the long term.'
In York 'shared partnerships' have been encouraged between schools and local childcare providers to prevent saturation and ensure the viability of existing provision. Rosemary Flanagan, quality in education development co-ordinator for the voluntary, independent and private sectors, says, 'Any new providers, including schools, that wish to set up daycare in the city need to approach these partnerships to establish that they are not going to threaten the viability of providers. That way we ensure that any new business goes where there is an identified gap in provision and no existing provider will feel less viable.'
Although it has no legal power to regulate the market, the city's early years partnership makes a further check at the planning stage to ensure that proposed provision is not going to force other nurseries out of business.
But Mr Fallon opposes such attempts to control provision. 'It's just not a good idea to go back to the days when the local authority decided these things. Money has been attracted into nurseries because it's a market and people are free to make choices,' he adds.
Whatever choice chains make in relation to school-based nurseries will have far-reaching implications for them individually and as a sector. In the end, their decision will come after a great deal of soul-searching, head-scratching and, above all, number-crunching as ultimately economic issues will dictate the outcome.
SCHOOL COMPETITION
One of the first private day nurseries managed by a state primary school opened in Bolton in the summer. The Baby Bede Nursery is in the grounds of St Bede Church of England Primary School and was created under the Neighbourhood Nurseries Initiative.
An annexe and neighbouring terraced house have been bought and extensively adapted with money from the New Opportunities Fund. The annexe houses toddlers, while babies are accommodated in the house.
June Roberts, deputy head of St Bede primary school which owns the nursery, says that while it currently caters for 30 children, it can take up to 44 and is open from 7.30am to 6pm, 51 weeks of the year.
She says an assistant head had been seconded to work on the nursery project and found through a questionnaire that there was 'overwhelming' demand for it in the community, which is among the 20 per cent most disadvantaged in the Lancashire town.
Mrs Roberts says there are long-term plans to acquire more buildings adjacent to the site to create an extended school 'where we can provide health and other services'.