UK nursery market 'slower to recover' from pandemic than other EU countries

Fatima Essoufi, head of mergers and acquisitions at La Maison Bleue, which has 30 nurseries in UK as well as over 300 nurseries in France, Switzerland and Luxembourg, said that ‘countries where there is a higher proportion of public funding – France with two thirds and Luxembourg with 80% [of funding coming from government subsidies] - are countries which have seen a quicker recovery. We are almost almost back to pre-Covid levels in France and the same in Luxembourg.’

Speaking at an early education and childcare webinar hosted by LaingBuisson, Ms Essoufi said that in other countries with less funding – Switzerland and the UK – there had been a shift towards parents looking for ‘nurseries which are closer to home as opposed to closer to the office, more demand for sessions across the week and cancellations of nursery places in places where parents lost their job’ the latter being mainly low to middle income families.

La Maison Bleue, which is the third-largest provider in France and the largest in Switzerland, bought The Old Station Nursery Group in February 2019.

Private expenditure on pre-primary education in France is among the lowest in the OECD at 7%, OECD data from 2015 shows. In the UK private sources of income made up 41% of expenditure on pre-primary education in 2017, though this is likely to be less now due to the introduction of 30 hours of funded childcare for 3 and 4-year-olds.

A survey of nursery groups from Cairneagle, which co-hosted the event, found that groups had an average of 85-90% of their usual enrolment compared with last year, with 23% having a 20% or more decrease.

Arun Kanwar, partner at Cairneagle Associates, said that nurseries in ‘professional areas' have 'fared better’ and settings in London and the south east were ‘better off’ than those in the rest of the country. Their research shows that being close to densely populated residential areas with dual-income professional families were important for occupancy, with other factors including grandparent availability, proximity of schools, acquisition integration and reliance on funded hours.

CEO of Kids Planet Clare Roberts added, ‘It is areas where there are high numbers of funded places that have been slower to recover. I think this is down to things like less SEND support. It’s clear that families aren’t necessarily being signposted as they were before – obviously we would hope that improves as the virus disappears.’

She said that while her group still offers entirely funded places, and some of the hesistancy from these parents was also ‘fear of the risk of Covid’.

Ms Essoufi added that unlike in France, with its relatively generous state expenditure on the early years, ‘the fact there is less social work means that some parents don’t know they are entitled to their funded place’.

Both predicted that the sector would recover in 2021 as ‘parents will need childcare even if they are working from home’. Both groups are looking to expand further in the UK, with Clare Roberts adding that she expected her 52-setting group would have doubled in size in 2-3 years.

Covid side-effects

There are early signs that the lockdowns may cause parents’ working patterns to shift long-term, Mr Kanwar citing a parents’ survey by Bright Horizons which showed that just 5% of parents want to go back to old ways of working, with 70% of parents saying they ‘don’t want to go back to the way it was before’. Demand was moving towards more flexible session patterns and shorter hours, he said.

He added that an ‘unexpected side-effect’ of the pandemic is that ‘staffing might be easier as there won’t necessarily be the jobs to go to’ – citing the recent collapse of retail giants Arcadia group and Debenhams. He said survey data also showed 40% of operators said recruitment of qualified staff had become easier while 60% said unqualified recruitment had become easier.

Ms Roberts added she had also found ‘there are more people available for positions’ and added that measures precipitated by Covid-19 such as having extra staff for bubbles had led her to increase the number of apprentices by about 150.

Mr Kanwar said the early years sector ‘had done relatively well’ compared with other sectors because of the government support available, citing the furlough scheme, continued funding of 2,3, and 4 year olds and business rates relief.

He said, ‘in many ways the sector has been more supported than other sectors – at the same time the sector has come together in a concerted way’ he added, citing that 80 nursery groups formed a ‘covid-19 crisis working group’.

Cairneagle authored the 16^th edition of LaingBuisson’s UK Childcare Market Report earlier this year.