Nurseries cost more than private schools. Well of course they do – duh..!!

March 7th 2013

I am breaking my rule of one blog post a week, because tweeting simply cannot give credibility to the confusion in the media elicited by the annual childcare cost survey.

The survey tells us what parents pay for childcare. It does not address either the actual cost to provide childcare or who should bear that cost. ‘Nurseries are more expensive than public schools’ scream the headlines. Guys, nurseries cost what they cost.

Nurseries are not great generators of profit. LEYF does not cream off a load of profit so we can all be paid more than 900 times that of our lowest staff member like Sir Terry Leahy at Tesco. Nurseries do not operate like banks with the Chancellor crawling to Brussels to justify bankers keeping large bonuses. If the £600m about to be spent at RBS on bonuses for bankers were available to the childcare sector, we could double the number of two year olds getting their free 15 hours, or even double the time to 30 hours for those already using the nurseries. (A much better use of money in my humble opinion.)

Here is the reality: nursery costs are made up of 77% staff cost; the rest is rent, food, equipment, training and the unexpected. There is little opportunity for vast profits; and in our case, as a social enterprise, any profit we make is reinvested to keep fees low and quality high, support parents in difficulty, develop training opportunities for apprentices and increase our contribution to local communities.

No one complains about what schools cost. That is because we have agreed as tax payers to fund education. If we had to pay for our education, we would be paying the same as private school fees (which is the real cost of education). The question therefore is this: should we pay for childcare as part of the education offer??

Mainland Europe has decided to do this, and pays up to 100% of the costs. It would certainly make my life easier trying to keep fees low and quality high if the UK would follow suit. But what about the free offer I hear you say? We have been complaining for nearly 10 years that the free offer is insufficient. The NDNA pointed out in a recent report that members are making a loss of £500 per year for every child in receipt of free nursery entitlement hours. In London a childcare place costs at least £6 per hour for high quality childcare. The Government pays anything between £3.66 and £4.80. Even those of us without a C in GCSE Maths can do the sums: yep, a shortfall of £1.80 per hour per child. Add that up and it soon becomes a big gap.

The issue of what childcare costs will never go away until we have a big discussion and decide whether we as tax payers should fund the central costs of childcare. It’s certainly worth the outlay, and the return on such an investment is great. For those taxpayers who see having children as a private matter, then let me remind them it is these children who will be funding their pensions during a long old age.