The early years sector saw a significant update on Friday, 21 February [see Analysis], as statutory guidance introduced stricter wording on voluntary charges and an increased requirement for transparency.
In response, many nursery owners are now carefully reviewing their parent contracts and considering how best to implement a consumables charge moving forward. While this update may seem like an additional administrative hurdle, it also presents an opportunity to reassess financial models and ensure long-term sustainability.
While it has made some owners nervous, the guidance has once again brought the matter into conversation, and for those who were absorbing these costs, this gives a welcome opportunity to review this and see about reclaiming those costs where they can.
Looking ahead to September 2025, there is reason for optimism: the anticipated rise in funding rates for babies and toddlers is set to exceed the private hourly rates charged in many nurseries. This shift marks a potential turning point for the industry, offering a level of profitability that many settings have not previously experienced. This is especially true in settings based in the North, or deprived areas where the day rate is lower, and while not every area has yet confirmed what percentage of the funding rates will be passed onto settings, we know that a minimum of 96 per cent will be passed across.
Next steps for nursery owners to maximise revenue while complying with updated regulations include:
- Reviewing and updating parent contracts.
- Ensuring transparent communication with parents regarding consumables and additional costs.
- Monitoring regional funding rates and adjusting pricing strategies accordingly.
- Considering the rising demand for nurseries when assessing business value and staying up to date on market trends and valuations to see how that affects them and their business plans.
