Does the rise in private equity investment in England’s childcare sector put nurseries at risk of closure? We asked two experts in the sector to share their views
YES
Dr Antonia Simon
Associate Professor at Social Research Institute, UCL
Research I led examining the reach and impact of private sector childcare in England identified a change in the provision landscape, with smaller settings being replaced by larger providers or chains, through a process of ‘acquisitions and mergers’. This growth is being funded by a finance model which prioritises profit-making by borrowing money or ‘leveraging finance’ (which gambles on profits being greater than the interest payable).
Private equity is argued to offer advantages, such as competition to meet consumer demand while keeping costs down, because companies that fail to do so are driven out of business by competition. However, this argument may be weak to make in childcare, when evidence finds this process is not leading to an increase in childcare places.
There are also ethical concerns about the…
