School-based expansion raises stability concerns for UK early childhood sector, raising questions for Australia

An open letter to the UK Department for Education and Olivia Bailey MP has highlighted concerns that rapid expansion of school-based nurseries, without transparent market modelling, may be destabilising parts of the UK’s early childhood education and care system.

The letter, published by sector advocates, points to a growing structural risk: policy expansion is occurring faster than the system’s capacity to absorb it, with limited evidence that new plans are being targeted to areas of genuine undersupply.

While grounded in the UK context, the issues raised reflect broader pressures seen across international early childhood systems, including Australia.

The UK Government’s ‘Best Start’ initiative aims to improve access to early education through an increase in school-based nursery places. However, the letter argues that the new provision is not consistently targeted to areas of undersupply. Instead, some expansions are occurring in markets already serviced by private, voluntary and independent (PVI) providers.

This approach risks redistributing enrolments rather than increasing overall participation, a pattern that has been observed in other jurisdictions where expansion has outpaced planning.

The closure of Marham Village Pre-School in Norfolk, after more than 50 years of operation, is cited as an example of how new provision may affect existing services. While a single case does not establish a trend, it illustrates the potential consequences of expansion without local impact assessment.

The letter also highlights longstanding differences in operating conditions between PVI providers and school-based settings.

Key concerns include:

• business rates obligations in England, which do not apply in other UK jurisdictions
• funding levels that do not reflect the full cost of delivery
• perceptions of quality that favour school-based provision, despite high ratings across the PVI sector

These factors contribute to an uneven operating environment. School-based services often benefit from existing infrastructure and funding arrangements that are not available to PVI providers. As a result, expansion within the maintained sector may place additional pressure on already constrained services.

A mixed delivery model,  spanning PVI, community and school-based provision,  s widely recognised as supporting accessibility, flexibility and parental choice. The letter suggests that imbalanced expansion may lead to:

• reduced flexibility, particularly where school-based settings cannot offer extended hours
• loss of locally embedded services with strong community connections
• increased market volatility linked to service closures
• workforce disruption across different parts of the sector

These risks are consistent with patterns observed in other early childhood systems where growth has not been supported by coordinated planning.

The letter outlines several areas for reform, including:

• targeting new provision to areas of demonstrated need
• engaging with existing providers before approving new services
• reviewing funding rates to better reflect delivery costs
• addressing disparities in operating conditions across provider types

These measures align with international evidence on effective early childhood system design, particularly the importance of balancing expansion with sustainability.

In Australia, comparable dynamics are beginning to emerge as governments expand preschool and early learning provision, particularly through school-based models.

Recent state-led initiatives, including the rollout of public preschools in New South Wales and Pre-Prep expansion in Victoria, reflect a strong policy focus on increasing access and affordability. While these reforms are widely supported, sector stakeholders have raised questions about market impact, particularly in areas where community-based and private providers already operate.

Key considerations in the Australian context include:

• the risk of enrolment redistribution rather than net growth in participation
• funding and regulatory differences between service types under the National Quality Framework
• workforce pressures, including competition for qualified educators
• the long-term sustainability of smaller, community-based services

The Australian Competition and Consumer Commission’s inquiry into the early childhood education and care sector has also highlighted the importance of market stewardship, noting that supply expansion should be carefully aligned to community need and existing service capacity.

In addition, the National Quality Framework emphasises a mixed-market approach, recognising the role of diverse provider types in supporting access, inclusion and quality outcomes.

The issues raised in the UK correspondence point to the role of system-level planning in managing growth. Transparent market modelling, alignment of funding and regulatory settings, and structured engagement with providers are identified as key mechanisms to support stability.

Without these, expansion policies, while well intentioned, may contribute to fragmentation rather than improved access.

Although the letter focuses on England, the underlying tensions are not unique. Balancing affordability, accessibility and provider sustainability remains a central policy challenge across early childhood education and care systems, including in Australia.

The correspondence serves as a reminder that expansion alone does not guarantee improved outcomes. Sustainable growth relies on coordinated planning, equitable settings and a stable provider base.

Read the full letter here.