Nursery insolvencies on the increase

Fri, 02 Sep 2016 | BUSINESS NEWS

The number of UK nurseries becoming insolvent has increased by a staggering 80 per cent in the past year, according to research from accountancy firm Moore Stephens.

Some 29 nurseries became insolvent in the 12 months to the end of March 2016, up from 16 the year before. Moore Stephens claims the increase could be attributable to the national living wage, which has set pay for over-25s to £7.20 an hour.

The result of the rise in staffing costs is expected to be an increase in the price of a nursery place for parents looking for childcare. Insolvency News reported that staff ratios for nurseries are already set at very high levels, making staffing a major cost factor for those running childcare establishments.

Moore Stephens partner Mike Finch explained: “There is a considerable burden on nurseries which only serves to further hit their margins. The considerable time and staff costs that are required to meet these obligations are putting more financial strain on nurseries across the UK.”

As a result of the increase in insolvent nurseries, there may be acquisition opportunities for those looking to grab a bargain in the childcare sector.

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