Northern Rock is not the only fall-out from the economic crisis in the US over bad lending debts. Childcare is affected too. ABC nurseries, which bought up several American childcare chains, and also has substantial holdings in the UK, is in trouble. Its US nursery purchases have turned out to be a business failure as the recession bites, and women have lost their jobs or can no longer afford to pay for childcare. ABC was badly over-extended, and had too many debts.
If ABC goes belly-up, the Australian government faces the closure of 30 per cent of its childcare places. Australian ministers are anxiously watching the situation.
Yet the UK Government is still confidently encouraging private market expansion in childcare, and is busy turning our public system into a private one. One of its assumptions is that nurseries are not sustainable - ie, not making a profit - because managers lack basic business skills. But ABC is not lacking in business skills. It has a very sophisticated financial operation, but it was caught out because it over-extended itself - just like Northern Rock.
Sustainability is hard to achieve for nurseries in poorer areas. How can you get hard-up or indebted mothers to pay? What do you do when they don't? Refuse their children a place? Scrimp on staff costs? Close the nursery?
Will our Government bail out the failures, and engage in what is sometimes called 'corporate welfare' - giving subsidies to businesses that are not 'sustainable', to enable them to survive? It was public subsidies - childcare tax credits - that got ABC going in the first place.
If mothers cannot pay the fees that nurseries and children's centres need in order to make a profit, and so the poorest children are being denied access to the provision, then maybe the Government should rethink childcare and nursery education altogether. It could always do what it did for Northern Rock - nationalise.
Helen Penn is professor of early childhood studies at the University of East London. See Analysis, p11.
