Market View: Key trends revealed by Cairneagle early years survey

We ran our regular survey of UK nursery operators this September to better understand current performance and key issues, as well as views on the outlook for the sector. We will publish our full results shortly but thought that it would be useful to share some key perspectives in advance of that.

First, September occupancy while ahead of 2022 levels is still trailing pre-Covid levels, and for 40 per cent of respondents, it has been behind where they expected to be at the start of the year. This softer-than-expected September is a result of two factors:

• The ongoing staffing challenges – 65 per cent of respondents reported that the lack of staff has caused a waitlist in at least some of their settings.
• Demand – 70 per cent of those surveyed also said that occupancy is being held back due to parents’ financial circumstances, economic uncertainty or affordability of fees (especially in light of the level of fee increases which have been put in place this year).

The staffing situation, however, is at least not getting worse. Most operators reported that recruitment and retention have either remained the same or improved from this point last year.

Looking ahead, there is optimism around growth in demand.

In the short term, enquiries are up on last year and, additionally, more than half of operators anticipate enrolment to grow over the next three to six months.

In the longer term, with the expansion of childcare entitlement for children under the age of three, operators predict a seven percentage point increase in their occupancy rates over the longer term. While there are concerns about how staffing will continue to hinder the ability to meet this growing demand and how margins may be impacted by the funding extension, most operators are preparing for the future through a combination of initiatives, including attracting staff, expanding or acquiring capacity and reconfiguring.

Written with thanks to Arash Fatemian and Madeline Alcock.