The expansion of the funded hours appears to be offering a promising outlook for nursery providers. More parents are taking advantage of the entitlements, demand for places is rising and nurseries, for the first time in years, have started to open waiting lists. Nursery groups, meanwhile, are expanding existing provision, opening baby rooms and looking to acquire premises to meet demand.
But this optimism comes amid mounting financial pressures. Expansion has been put on hold for some nursery groups following National Insurance and minimum and living wage increases. Meanwhile, the Government's decision not to relieve nurseries in England from business rates has led some larger groups to proceed ‘more cautiously’. Recruitment challenges in some areas of the UK, particularly in areas of disadvantage, are causing some providers to exit the market entirely (see Case study).
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