What's the new law coming into force in July 2025?
From July 2025, public subsidies and parental payments received by privately run kindergartens, (known as barnehage in Norwegian), can only be used to cover costs directly related to approved kindergarten operations and that are "reasonable in scope" for the goods or services being bought.
This applies to all costs, including property-related expenses.
Greater municipal oversight
The new law will also give municipalities additional powers over private kindergarten chains, including:
- the power to issue local regulations on opening hours, staffing, and requirements for competence and also to set the maximum level of parental payment for a kindergarten place, although these changes will not come into force until August.
- greater control over the establishment of new kindergartens in their municipality. If companies running kindergartens receive an "establishment approval" from the municipality, they will be able to receive subsidies at an earlier stage.
- the right to approve any changes to the way private kindergartens operate that significantly deviate from what was promised in their application for establishment approval. This might include changes to approved play and activity space per child, expansion of existing operations, or relocation.
Tightened financial controls
The law brings in stricter rules for transactions with "related parties", to prevent the disguised extraction of profits by those operating chains using their own companies to supply kindergartens at inflated prices.
Private kindergartens will also be required to notify both the municipality where they are established and the Directorate of Education if they sell the properties where their kindergartens are housed in order to make it easier to spot misuse of government subsidies.
The ruling Labour Party has said it wants to go even further in future and bring in additional restrictions which would make it more difficult for private kindergarten chains to sell off buildings and lease them back, passing the cost on to local municipalities.
What's the point of the new rules?
The rules are intended to reduce the amount of profit that private companies running kindergarten chains can take out of their companies.
In December 2020, a government inquiry into private actors in the welfare sector reported that the kindergarten sector had the biggest share of private providers of any of the government funded welfare sectors in Norway. It was also the most profitable sector for private actors.
The committee concluded that municipalities have paid out an unnecessary amount of public subsidies to private kindergartens between 2011 and 2018, giving them more funding than was required to provide a high standard of care.
"With these regulations, we are preventing the enormous profiteering that should have been stopped many years ago," Norway's education minister, Kari Nessa Nordtun, told the E24 financial newspaper after the law was passed.
What criticisms do private kindergarten operators have?
Karita Bekkemellem, CEO of NHO Geneo, the trade body representing private kindergartens in Norway, has said she is "extremely critical" of the new law.
A big criticism is that the good times for private kindergarten operators already came to an end in 2019 when stricter staffing requirements came into force.
A report from Statistics Norway found that four out of ten private kindergartens made a loss in 2023, with 99 private kindergartens closing down in 2022.
They argue that the new laws will further dampen activity in a sector that is increasingly struggling, making it harder for parents to find places for their children and harder to provide quality care and education.
Bekkemellem told the education sector website Utdanningsnytt that if Labour were to push ahead and ban companies from selling off properties and leasing them back, that would lead to more closures.
"If restrictions are placed on this, it will in reality mean that the government is closing down more kindergartens," she said. "Then the municipalities will have to build their own, or buy private kindergartens. The question is how sound that is from a socio-economic perspective."
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