The Competition and Markets Authority has opened a market study into early years education and childcare services in England, putting the pressures on nurseries, childminders and school-based providers under fresh scrutiny.
For small childcare businesses, this is worth watching closely. The CMA says it will look at whether the sector is working well for families, providers and the wider economy, with a focus on children from birth until they start school. The review sits alongside the UK government’s wider look at childcare provision in England.
The regulator has set out several areas for investigation: availability of places, barriers to entry and expansion, affordability, provider sustainability, funding, the information parents use when choosing care, the role of local authorities and other public bodies, and how different provider models affect choice and costs.
That is a broad agenda, but the small business angle is clear. Many independent nurseries and childminders are operating in a market shaped by high staffing costs, premises costs, local demand, government-funded hours and intense parental price sensitivity. If the CMA’s evidence gathering captures those pressures properly, it could influence future policy on funding, local capacity and the way parents compare providers.
Why this matters for small childcare firms
The CMA says there are more than 53,000 childcare providers in England, delivering early years education and childcare for children aged 0 to 4, with an estimated 1.6 million places. It also says the sector is worth about £14 billion to the economy each year, with around £8.91 billion of taxpayer funding spent in 2025-26.
Those figures underline why this is not just a family affordability story. Childcare capacity affects employers, working parents and local economies. For providers, the review could become a channel for explaining where expansion is genuinely blocked: recruiting qualified staff, finding suitable premises, dealing with fluctuating occupancy, absorbing wage and utility costs, or navigating funding rates that do not always match the cost of delivery.
The CMA also plans to look at differences between provider types and ownership structures. That may matter to smaller operators if the review examines how independents, charities, childminders, school-based settings and larger groups compete in practice. The regulator has noted wider shifts in the market, including research suggesting that private equity-backed provision has grown while some not-for-profit provision has declined.
What providers should prepare now
Small providers do not need to wait for final recommendations before getting their evidence in order. The most useful preparation is practical: document the main cost pressures in the setting, track waiting lists and occupancy patterns, record recruitment issues, and keep examples of how funding rules or local authority processes affect day-to-day decisions.
Providers may also want to review how clearly they present fees, funded places, extras, opening hours and availability to parents. One of the CMA’s themes is information and choice, so businesses that can show transparent pricing and clear communication will be better placed if the review leads to recommendations on market practices.
The study is England-focused because early years policy is devolved, but the CMA says it will consider whether its findings could be relevant elsewhere in the UK. That means childcare operators outside England may still want to follow the process, especially if similar affordability and sustainability pressures are present in their local market.
For now, this is an evidence-gathering moment rather than an immediate rule change. The important point for small childcare businesses is that the regulator is explicitly looking at provider sustainability alongside parental affordability. That gives smaller operators a chance to make the commercial reality of early years provision visible before government decisions are made.
