What is the solution to 'childcare deserts'?

The Government's continued commitment to expanding subsidised early years education and care should in theory represent a fantastic opportunity to improve life chances and reduce childhood inequality.

However, in addition to the subsidised hours only being offered to working families who meet the eligibility criteria, the current market in England is not locally balanced to provide access to high-quality provision to all families.

Of the 10,000 nursery providers in England, 84 per cent need to make a surplus in order to survive, and most are tiny, with one or two settings. Many of the largest providers are owned by private equity firms and foreign investors. They are the ones which have the most to gain from future policy direction, with children from the most disadvantaged backgrounds, and those most in need of high-quality education, most likely to be excluded from the benefits.

MISSING OUT

Large groups tend to establish services in communities with higher household incomes, greater parental employment, and families who can afford additional nursery fees.

This results in ‘childcare deserts’, areas where there is a shortage of accessible and flexible places. Deserts are concentrated in the most-deprived local authorities (see map overleaf, created from New Economics Foundation Data).

Rural communities also suffer from childcare deserts, where falling birth rates reduce demand. And early years places for children with special needs and disabilities are hard to find anywhere, as settings are financially non-viable without additional funding or support.

The result is that the children who could benefit the most will be the ones most disadvantaged by the way the current market is organised, as highlighted by the Institute for Public Policy Research (IPPR)'s The childcare challenge.

Moreover, the expansion of government-funded early years places will disadvantage smaller providers operating in low-income neighbourhoods. These providers are much less able to charge additional fees. Yet these organisations, particularly those with social-purpose values and approaches, are well placed to deliver on the Government's mission, because public investment in them also builds social value through the delivery of high-quality early education for all, not just some.

The case studies featured here highlight examples of settings with inspirational social purpose outcomes that have the opportunity to grow within the childcare market. They underline how the Government must support greater diversity, including growing for-purpose and social enterprise provider models that reinvest profit to maximise social impact. This diversity and support will improve provision, increasing choice for parents and ultimately creating better outcomes for children, with the aim of continuing to be able to scale and offer high-quality provision in childcare deserts.

CASE STUDIES

The Indigo Group

Indigo Group is a social enterprise in Glasgow, providing a comprehensive model for children from six weeks to 16 years. For more than 25 years, the group has focused on providing high-quality learning and childcare experiences for all children. It views access to innovative, family-informed learning and childcare as the key to overcoming poverty

Indigo works closely with local people, places and organisations to drive the importance of community in early development, going beyond the delivery of services to participate in communities and create positive change for families.

Indigo is committed to inclusive practices, especially for families requiring additional support. Its dedication has been recognised with accolades, such as a Highly Commended in the Inclusive Practice category at the Nursery World Awards in 2024.

LEYF

In 2008, LEYF became a social enterprise, focused on financial self-sustainability to offer high-quality provision to all children.

With 40 nurseries across London, LEYF uses a cross-subsidy model to drive financial and social impact, including situating 75 per cent of its nurseries in lower-income areas, which are not financially attractive to commercial providers. Forty-nine per cent of LEYF nurseries are rated Outstanding by Ofsted against a national rate of 16 per cent, proving the point that nurseries in poor neighbourhoods can deliver outstanding care and education.

Acorn Early Years Foundation

In 2012, the organisation began its transition into a charitable social enterprise, and this has enabled its strong ethical grounding to be protected for the long-term benefit of children and families.

Acorn operates a cross-subsidy model which monitors and evaluates the financial viability and the social impact of each nursery to ensure a balance across the group. Partnership working with Children's Centres, local authorities, schools and external agencies is a key feature of Acorn's success and in promoting the sector as a pathway for both young people and adults seeking a change of career.

In 2023, Acorn introduced a voluntary contribution towards the cost of food and activities for fully funded places only. A number of these fully funded families have been happy to contribute. Places are also made available for the local authority and for children with additional needs. Acorn Early Years won Nursery World's Nursery Group of the Year Award in 2024.

Coin Street

Coin Street Centre Trust and Coin Street Community Builders jointly operate a family and Children's Centre in Southwark, central London, with the trust overseeing the day-to-day work of the centre.

Coin Street generates income to invest in the neighbourhood. Three-quarters of its income comes from commercial activity, such as letting spaces to restaurants, shops and design studios; and hiring venues for conferences, exhibitions, street markets, etc. Through this partnership and collaborative working, Coin Street was able to increase its reach to families not accessing support elsewhere.

Match Box Nursery & Poplar HARCA

Matchbox is an independent day care nursery and social enterprise, based at an East London housing-association estate. It works in partnership with the Poplar HARCA housing association, which acts as its landlord, supporting the funding of building refurbishment and acting as a key supporter.

Around 50 per cent of its children have parents who are Poplar HARCA residents.

Babyzone

Babyzone is a registered charity, operating since 2019 with a vision to ensure that all children are able to reach their potential, regardless of background and circumstances. Currently operating out of five purpose-built OnSide Youth Zones, its mission is to empower parents in the UK to enable their children to thrive.

OnSide Youth Zones operate in areas of high socio-economic deprivation, delivering after-school and holiday support to young people across the UK. Babyzone utilises the spaces in the mornings from 9.30am to 2.30pm for Early Years Family provision (birth to five years), partnering with local services and organisations to create a ‘one-stop shop’ for parents to access free, evidence-informed developmental classes and other essential support.

Reshaping the way we deliver policy: June O'Sullivan, CEO of LEYF

‘Early childhood education and care (ECEC) has a social purpose, but delivering it within the complex and messy realities of the market model complicated by underfunding and under-investment feels like an impossible task for many ECEC leaders.

‘The social enterprise model of the London Early Years Foundation (LEYF) demonstrates that it is possible to drive an effective and fairer business model which connects social business and social pedagogy, resulting in high-quality services for all children but especially those from disadvantaged families and communities.

‘These children are often excluded because of poor policy decisions. It is time that we reshaped the space between state provision and the commercial and corporate sector and support social business through procurement and investment in order to reshape the way we deliver major ECEC policies.’