Quarter 1 2026: What we’re hearing from the nursery sector

Quarter 1 2026: What we’re hearing from the nursery sector

Across insights gathered and events attended in quarter 1 2026, including at the Childcare Expo and the Nursery World Business Summit, one message came through very clearly: early years is in the spotlight like never before, but the reality on the ground still feels fragile.

From Morton Michel’s research team perspective, the first quarter of 2026 has been defined by tension between ambitious government promises and day to day operational pressures. Providers are being asked to do more - on inclusion, quality, and digital practice - while wrestling with funding gaps, workforce shortages and rising regulatory demands.

Against that backdrop, we heard both frustration and a quiet determination to keep delivering for children and families.

The new Ofsted framework dominated many conversations. Officially, the language from Ofsted is about collaboration, context and support. The introduction of planning calls before inspections and the ability to appoint a nominated inspection lead have been genuinely welcomed.

However, the mood from nursery staff told a different story. Educators spoke of a strong suspicion that school based nurseries are faring better than PVI providers under the new Ofsted report card system. Similarly, there was a belief that the new “Exceptional” rating is almost unattainable in practice. There was real unease about fairness and transparency, especially where apprenticeships and junior staff are concerned. Many leaders felt they were being penalised for using apprentices despite government encouragement that apprenticeships are part of the workforce solution. Lastly on Ofsted, recurring anxiety about no notice inspections remains an important issue for Nursery leaders.

Funding remains another constant pressure. While the headline story is additional investment and expanded entitlements, all very positive, providers report a very different experience. Research from the IFS show that real terms funding is still below its peak, while nursery managers expressed that cashflow can be distorted by termly payments, and parents may be confused about what “free entitlement” actually means. Still, providers quietly absorb costs rather than exclude families, creating a model that is emotionally rewarding but financially unsustainable.

Workforce discussions carried a similar mix of hope and strain. There is a shift towards describing staff as “educators” rather than “practitioners”, and a strong recognition of the need for psychological safety, professional development and flexible benefits. Yet recruitment remains hard. Generational debates gained traction as leaders grapple with how to attract and retain Gen Z staff alongside longer serving colleagues.

Sources: 
1. https://ifs.org.uk/publications/early-years-policy-spending-and-design
2. https://www.nurseryworld.co.uk/content/news/concerns-that-more-school-nurseries-are-achieving-ofsted-exceptional-grades-than-pvi-settings
3. https://www.nurseryworld.co.uk/content/news/minimum-wage-rise-to-increase-nurseries-delivery-costs-by-more-than-2-per-cent
4. https://www.nurseryworld.co.uk/content/news/early-years-providers-seeing-a-significant-increase-in-the-number-of-staff-leaving-the-sector