With the end of this financial year fast approaching, many parents are bracing themselves for that most unwelcome of communications – the news that their childcare fees are rising. Fee hikes are an inevitability in the face of so many escalating costs – which from April will include the rise in the national minimum wage. These fee increases will have to be significant to shoulder the growing burden of overheads.
In areas of the country where parents cannot afford this, many providers say they may have to close their doors for good (see online 15 February). As long as the Government covers its ears, there seems to be no way of breaking this vicious cycle of disadvantage.
With the need to make fees pay, it's not surprising that the big nursery groups are now focused on consolidation in areas which are relatively affluent.
In our annual Nursery Chains supplement, free with this issue, you can gain the big picture on the groups’ current position in the market and the implications for the sector going forward. The supplement also includes our two exclusive rankings, of nursery groups by size and by Ofsted gradings.
In the current climate the groups undeniably hold some trump cards: they have balance-sheet security and safety in numbers to navigate challenges such as staffing. Many are also determined to prove that they can deliver quality, to match the best of the independents. While the chains continue to grow, overall the market remains fragmented; there are still an estimated 10,000 single sites operating.
The large groups are not completely invulnerable to current pressures. The recruitment crisis, for example, has fuelled some downgradings, as our Ofsted table shows. The number of Outstanding grades is down this year from 389 to 369. The issue of quality will be a big theme at our annual Business Summit in London on 7 March. I hope to see you there.