Nursery Sector in Danger

One of the UK's oldest-established nursery chains has warned that government policy over providing affordable childcare is pushing the sector towards "the brink of collapse".

Ravenstone House, ranked 12th in the 2005 league table of top nursery chains, has sold off 10 of its 13 schools, claiming that it is unable to function in the face of competition from government-funded Sure Start centres and a ban on charging parents "top up fees" on their free childcare entitlement. The chain will retain only its two prep schools and a primary school in Milton Keynes, ending the company's thirty-two year association with the pre-school sector.

Hilary Pauley, chief executive of Redstone, claimed that the rate the government and local authorities pay for state-assisted childcare is inadequate, and asserted that nurseries should be able to charge parents the difference. She also blamed increases in teachers' pensions and a reduction in potential customers due to longer maternity leave for decreasing profit margins in the sector.

In February this year, the Staffordshire-based Busy Bees nursery chain sold out to Australia's ABC learning for £76m, and during the last month there have been rumours that private equity-owned Asquith Nurseries may also be gearing up for a £100m sale.

Ms Pauley's comments came as the government reviewed its strategy for early years funding and pledged to standardise the provision of resources for free childcare places across the different sectors.

Purnika Tanuku, chief executive of the National Day Nurseries Assocation, welcomed the decision, saying: "We hope this consultation will highlight how many providers are finding the funding they receive for the scheme unworkable, and how more funding and clear mechanisms are needed for local authorities so that they can ensure providers in the private, voluntary and independent sectors can continue to provide free sessions."

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