Nurseries backed by private equity (PE) - usually large nursery chains - are more likely to open in wealthier areas, where they can maximise profit-making. Meanwhile, not-for-profit nurseries, typically operated by local community organisations, charities or educational establishments, are declining faster in deprived areas than in wealthier neighbourhoods, leaving deprived neighbourhoods with fewer childcare options.
A care desert is an area with three or more children for every licensed childcare place. Research from 2024 by the New Economics Foundation found that within the most deprived quintile of local authorities, over 80% of these were classed as care deserts, compared to less than 5% in the wealthiest quintile. The local authorities with the highest number of under-5s for each childcare place were Walsall, with 6.55, Sunderland with 5.73 and Slough with 5.69. In contrast, those with the lowest number of children for each place were Richmond-upon-Thames with 1.61, Wokingham with 1.78 and Bromley with 1.97.
For-profit nurseries, which are privately owned but not backed by private equity, form the biggest provider group in more deprived areas. The researchers say this monopolisation of nursery care leads to a lack of choice and availability for low-income families living in the most deprived areas. Nursery workers who participated in the research spoke of a loss of family feel when not-for-profit nurseries close in favour of for-profit and private equity (PE)-backed providers.
One nursery worker said in interviews: "Parents were saying, ’Oh my gosh! It’s all going to change,’ and ’we joined your nursery because of the family feel and the family atmosphere and that’s going to disappear and it’s going to become corporate and money orientated.’"
There are also proportionately fewer nurseries with Ofsted ’outstanding’ ratings in deprived areas, indicating a link between nursery ownership and quality of care in poorer areas.
These findings come just as the Government is due to extend its 30 hours of free childcare offer for working parents to all children over nine months old up to age five this autumn. The expansion builds on the 15 hours of free childcare currently available for eligible working parents with children aged from nine months. The researchers say the findings are a stark reminder of the childcare market’s current dysfunctionality.
Lead author Dr Antonia Simon (Ioe, UCL’s Faculty of Education & Society) said: "High-quality Early Childhood Education and Care has been linked to improving the life chances of all children, especially disadvantaged children such as those from poorer homes. However, the distribution of openings and closures is uneven, particularly for more deprived neighbourhoods, meaning that those who need this care the most cannot access it and are now living in ’care deserts’.
"Our previous study showed that the childcare sector is characterised by acquisitions, mergers and takeovers, with many providers operating with huge amounts of debt. Additionally, a growing proportion of these providers are PE backed large companies and chains, driven by profit-making. This research also finds a link with PE, with the fewest openings in the most deprived areas, suggesting these providers may avoid operating in these areas. If this continues, families in deprived areas will not have a choice about where to send their children."
The total number of registered nurseries in England declined from 24,000 to 22,500 between 2018 and 2024. This decline was mainly in the not-for-profit group with a 19% decline.
Conversely, there was a 10% increase in the for-profit, non-PE-backed group, mostly privately owned nurseries. This group is now the largest provider of nursery care in England. Although PE-backed providers have declined over recent years, their sector share has more than doubled from 2% to 5%, which the researchers say is because of the sharp decline in not-for-profit nurseries between 2018 and 2024.
Within the most deprived areas, not-for-profit and privately owned nurseries were the most likely to be rated outstanding, with 15% of these two groups achieving that rating during the time studied. Just 8% of PE-backed nurseries in deprived areas received outstanding ratings, compared to over 27% of PE-backed nurseries in the wealthiest areas. The researchers say this suggests that this group may invest more in the quality of nursery care in more affluent areas.
The researchers related data on the distribution of nursery closures across England to deprivation between 2018 and 2024, taking nursery ownership into account. They also conducted interviews, gathering case studies of several nursery workers.
Co-author Katie Hollingworth (Ioe, UCL’s Faculty of Education & Society) said: "Nursery workers we spoke with expressed concerns about the process of take-overs, which they said were sometimes chaotic and often happened with minimal warning, resulting in a lot of uncertainty for workers. Nursery workers were apprehensive that the needs of families were not always adequately considered within PE-backed companies."
The team recommends that the childcare market be better managed to incentivise providers to open in deprived areas and avoid monopolisation by one type of provider. The Government should support local authorities with a stronger role in managing the market to have more control over sufficiency and provider choice for parents.
Abby Jitendra, Principal Policy Adviser for Care, Work and Families, Joseph Rowntree Foundation - who funded the report - said: "Good quality childcare is vital for lifting parents on low incomes out of poverty. It helps parents stay in work and earn more, and sets children up for the best start in life. But our current system can fail to meet these goals.
"Nurseries that receive investment from private equity firms are less likely to open in deprived areas and non-profit nurseries are closing down. This means disadvantaged families have fewer choices and could find it harder to secure good quality work.
"As the Government expands its funded childcare offer and puts more taxpayer money into the system, it must ensure all nurseries are financially stable and put parents and children first."
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Mark Greaves
m.greaves [at] ucl.ac.uk+44 (0)20 3108 9485