Nursery reforms could cut childcare costs by 28%, DfE calculates

May 24, 2013 by

New calculations released by Department for Education will boost those seeking to push stalled plans through

The cost of childcare could be cut by as much as 28% if the government was to go ahead with stalled plans to raise ratios of children to staff in nurseries.

Government plans are currently stalled due to a disagreement within the coalition between the Liberal Democrats and the Conservatives.

The new calculations released by the Department for Education under a freedom of information request said parent costs could be cut from £4 an hour to £3.49 an hour (a 12% cut) while teacher salaries could go up. Alternatively, if the extra revenue was used solely to reduce costs for parents, this could yield costs savings for parents of up to 28%.

Conservative ministers had been hoping to relax staff-child ratios by September, but Nick Clegg, the deputy prime minister, vetoed the plans saying he thought the proposed ratio changes would lower the quality of childcare. Conservatives are likely to use the figures to show they have been on the side of parents and choice, but are being blocked by the Liberal Democrats.

Department estimates suggest that if legal ratios for under-threes rose from four children for each member of staff to six and increased from a ratio of one to eight to one to 13 for staff looking after over-threes, the number of full-time places could be expanded by 52% to 73.

This increase in places creates a gross additional revenue of around £200,0000 based on the nursery charging £4 an hour. Even assuming the setting required the employment of a graduate, revenue would rise by £166,0000. Distributing this over 73 childcare places for 52 weeks a year and 39 hours a week the nursery could maintain its revenues and reduce its fees from £4 an hour to £2.88 an hour, a reduction of 28%.

The figures are bound to be raised by allies of the education secretary, Michael Gove, and the children’s minister, Liz Truss, to show that parents are being denied a large-scale cut in their childcare costs by Liberal Democrat objections.

It is not yet clear if the plans can be revived, but Gove has acknowledged that his plan to introduce the changes by September are looking hard to implement. He claimed that Clegg had vetoed the plans because he was worried he was about to be challenged for his party leadership by the business secretary, Vince Cable.

The Daycare Trust earlier this year showed nursery costs rising while wages are stagnating: it found average childcare costs were increasing by more than 6% a year (more than double the rate of inflation).

After-school care costs more than a family holiday to Florida and the costliest nurseries are more expensive than top public schools.

via Nursery reforms could cut childcare costs by 28%, DfE calculates | Money | The Guardian.

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