London Early Years Foundation

5th May 2016

This case study looks at widening access to quality childcare in disadvantaged communities

Summary

Improving access to a high quality early years education in deprived areas is vital to narrow the achievement gap and promote social justice, but providers can often find it difficult to make it financially viable to run nurseries and maintain quality in deprived communities.

The London Early Years Foundation (LEYF) is a charitable social enterprise taking on this challenge in the capital. By developing a diverse portfolio of mixed-income nurseries, investing in shared infrastructure and building new revenue streams, the business is able to offer subsidised and free childcare places and run high quality services in deprived areas that would otherwise lack good nursery provision.

LEYF now operates 36 nurseries across London, employing 540 staff and offering 4,000 nursery places, of which 48% are free to parents. Of those 25 nurseries that have been inspected by Ofsted, nine have been rated outstanding and 16 good, ranking the nursery chain in the top five in the country, and first in London for quality. All profits are reinvested into scaling up their impact: increasing and enhancing provision, widening services and developing staff, including an Apprenticeship Programme which supports young adults to train and develop their careers.

“By giving children a high quality nursery education, supporting their parents to work, creating jobs for young people through our apprenticeship programme and campaigning for fair early years policies, we’re helping whole communities to thrive now and in the future.” June O’Sullivan MBE, Chief Executive, LEYF

Aspirations and objectives

Good quality early years education for children from disadvantaged backgrounds is vital to narrow the achievement gap and promote social justice. Yet the cost of childcare can be prohibitive, undermining a parent’s ability to work and meaning their children miss out. Providers also find it difficult to achieve sufficient scale to make it financially viable to run nurseries and maintain quality in deprived communities.

LEYF is the largest social enterprise nursery group in the UK, working to ensure that parents and children from all backgrounds can benefit from a high-quality nursery education, providing subsidised and funded nursery places in some of London’s most disadvantaged areas.

Approach

LEYF’s commercial model, developed with support from the Social Business Trust and Bain & Company, has focussed on:

  • Developing multiple income streams, including running contract nurseries for local authorities or employers and providing external training and support.
  • Building a diverse portfolio, with mixed income nurseries in a variety of different areas, where the surplus generated by nurseries in affluent areas can be used to support other nurseries.
  • Offering a fair pricing system, where fees are adjusted to reflect levels of deprivation and parents from disadvantaged backgrounds can benefit from subsidised and funded nursery places.
  • Investing in a common infrastructure, which is shared across the LEYF network in order to exploit economies of scale.
  • Reinvesting profits into the business to expand provision, improve quality and develop staff.

Outcomes and impact

This commercial model has ensured the financial sustainability and continued growth of the business; reducing reliance on grants and donations and attracting external investors.

The cross-subsidisation of places within and across settings has meant LEYF has been able to offer financial support to around one-third of parents and is one of a minority of nursery chains in London offering free places to the most disadvantaged two-year olds. Of those 25 nurseries that have been inspected by Ofsted, nine have been rated outstanding and 16 good, ranking the nursery chain in the top five in the country and first in London for quality.

LEYF’s Apprenticeship Programme supports staff and external students, including young people that were previously receiving benefits, helping to raise the quality of childcare services, tackle youth unemployment and promote in-work progression. The business’ commitment to local procurement and the sharing of good practice further maximizes its social impact on the wider community.

LEYF’s success has meant it has managed to secure £1.25m in investment, which will allow the social enterprise to scale-up its impact, doubling the number of nurseries over the next three years to give 6,000 children a year a LEYF nursery experience.

Measuring success

  1. 36 nurseries across London employing 540 staff
  2. 4.000 children given an LEYF nursery experience, with 48% of places free for parents
  3. 40 apprentices in training

“It can be challenging to operate in disadvantaged communities; finding suitable, affordable spaces and attracting quality staff able to bear the high cost of living in London while working in a relatively low status, low paid sector. We face a constant tension between our social intent and our business needs; our desire to support the most disadvantaged with our need to remain financially sustainable. There is no shortcut – just lots of hard work.

Our investment in our staff has been key to achieving the high standards we set ourselves: they buy in to our aspirations and share our single-minded focus on providing an outstanding nursery experience for every child. Our commercial model has enabled us to take over failing settings and turn them around; sustaining services where they would otherwise be lost and improving provision to offer an excellent early years education for generations of children to come.” Rashid Iqbal, Director of Children and Family Services, LEYF