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26.11.21

Why staffing is the biggest challenge facing the nurseries sector

James Dargan & Alex Hay

News

Sovereign Connects recently hosted a lunch for many of the nursery sector’s business leaders. We were delighted to welcome guest speaker, Cheryl Hadland, Managing Director of Tops Day Nurseries. Cheryl plays a significant role in the day nurseries sector, was founder of the All Parliamentary Group for Early Years, and speaks internationally on eco-sustainable day nurseries. The discussion was around the opportunities and challenges for businesses and the market, both current and looking to the future.

The nurseries sector has justifiably felt somewhat side-lined by successive governments. We took the opportunity, through discussion and conducting a straw poll, to garner sentiment around staffing challenges, potential legislative changes and funding in relation to Government rates.

1) Staffing: 50% of respondents see recruitment as the biggest issue facing the sector citing Brexit, alongside the salaries typically available to practitioners. 50% believe that Government will relax child to staff ratios in order to make the sector more financially sustainable, whilst 36% cited bigger incentives, improved reward systems and wage increases as viable ways to mitigate current staffing challenges.

2) Financial sustainability: With the minimum and living wage increases being c.10x greater than the increased funding provided by government per child per hour,¹ 30% of respondents questioned the financial sustainability of nurseries unless these increased costs are passed through to parents via higher service charges and additional consumable fees on top of 30 hours of government funding.

3) Business expansion: Despite all the headwinds facing the sector, over 80% of respondents plan to expand the size of their nursery group over the next two to three years.

The development of the youngest in our society is often reliant on the care provided by the nurseries sector, and with the consistent difficulties of a government funding regime that does not cover the full cost of childcare, nursery providers are going to have to increasingly work together or form larger groups in order to create sustainable business models which can continue to deliver a high-quality service to children.

In reality, larger nursery groups are most likely to be able to withstand the cost base pressures better if they have a larger staff base in a geographically concentrated area that can be used across multiple nurseries, as well as the financial resources to invest in technology-based solutions that can help the back-office functions work more efficiently.

For more information on how Sovereign backs businesses in the Education & Training sector, please contact James Dargan or Alex Hay.

¹ https://www.gov.uk/government/publications/minimum-wage-rates-for-2022, https://www.gov.uk/government/publications/early-years-funding-2021-2022/early-years-funding-technical-note-for-2021-to-2022.

FURTHER INFORMATION

 

Julie Sieger, +44 (0)20 7340 8800 or email: juliesieger@sovereigncapital.co.uk