@Iamthewombat - You’re right, it’s not as simple as that at all. I have had to sell furniture to pay my staff in really hard times.
Nursery workers are not that badly paid either. I get emails all the time from agencies trying to place nursery nurses, and most are asking for 25K + for term time only work.
It’s the nursery owners who are really struggling in reality. You only have to think about it: the turnover for a small nursery might be £200,000 a year, the same as a small shop. But where the owner of a small shop might employ one other person, the owner of a small nursery would need to employ five or six members of staff. Minimum wage is £8.72 an hour, but most nursery staff are qualified and won’t work for that. There has to be a hierarchy, so only the unqualified staff would be on minimum wage, with the hourly rate steeply rising for the Level 3’s and above (which half your staff must be). When you factor in employer’s NI and pension contributions, those five or six staff members are likely to cost in the region of £130,000 a year.
Shops are relatively cheap to rent and tend to be exempt from business rates. Nurseries on the other hand are expensive to rent because they are bigger and there are fewer available, meaning that landlords can charge extortionate rents. Churches are by far the worst - though at least church halls are exempt from business rates. Most nurseries pay £50,000 - £60,000 a year in rent, though this would be on the lower end of average - some (certainly in London) pay much much more.
So, you see, out of £200,000, nothing is left.
What’s even more unfair is the rule on VAT, which means you have to pay 20% extra on everything you buy. All businesses do, right? But the difference is, all other businesses charge VAT so can claim it back. Nurseries are not allowed to charge VAT, but must pay it on everything they buy.
And don’t even get me started on the unfairness of business rates. In Scotland, nurseries do not have to pay business rates. In England, business rates cost nurseries about £20,000 a year more. How is that fair? Yes, you need more floor space and the amount of floor space is ruled by what Ofsted says. But there is no adjustment for the fact that you only bring in as much as a small shop with five times the amount of staff.
The government does not understand the sector - this is the main problem. But unless you run a nursery, it’s just impossible to comprehend, I think. Parents don’t understand either. Even the staff don’t understand. But this is the truth of it and I’ve only scratched the surface.