To think someone MUST be profiting from private nurseries?

[SprinkleofSpringShowers]

Nursey saying that the free hours cripple them. My bill has gone down by £200 from £940 to £720 for the 15 free hours. My child is booked for 3 days/30 hours (not that he’s ever there 30 hours) I don’t really understand how they are struggling so much when any shortfall in the funding is just made up by parents.

The branch we use charges £73 a day now. They’ve open two new sites in the last year. Can’t be doing that badly can they?

Also think it’s really poor taste when they seem to pedal this image they’re struggling and the staff are likely paid NMW and the directors turn up in 2 year old Porsches.

Quite the opposite experience for me most in my 12yrs leased hence why you can't presume. It will depend on different factors some areas will mainly own others will mainly lease.

You can't presume based just on your experience.

Nope - did I say ALL????

And yes, I can make a certain amount of assumptions based on professional experience and research in my area of Southern England, where small independent nurseries are struggling and closing, and the big chains are moving in using purpose built nursery buildings. Four of those in my small market town alone - even one at the end of my road - and that does not include the private nurseries attached to the three private schools also in my town.

That it doesn’t fit with your experience doesn’t mean the evidence of this model in my area should be disregarded.

Anyway, I am out of this conversation.

The bigger chains like Bright Horizons are backed by institutional investors like pension funds, so that's where the profit goes. Both of my DC have gone to my workplace nursery, which operates on a not for profit basis; so while the fees are charged at market rate, the income is invested back into the nursery and it really shows. Staff turnover is low, the staff all genuinely care about the children, and the children are happy. Childcare shouldn't run on a for-profit basis, and EYFS education should be part of the school system like in France and Scandinavian countries.

The school pre school is also probably offering school hours, so no need for staff to be there at the crack of dawn to set up for 7.00 drop offs, nor for staff to still be there at 6.00 for late collections. So whereas a school nursery can employ the same staff to cover the whole time they are open, a commercial nursery has to pay more staff to cover that longer day. A school nursery and a commercial nursery are chalk and cheese when it comes to staffing costs. Add in the hard cost of a private nursery to pay for premises, utilities, insurance, then add on the soft cost of consumable materials , furnishings, decor, cleaning, maintenance etc………

I know MN hates any mention of SPAG and I will probably get called a cunt for even mentioning it (as usual) , but for some reason I can't leave it alone -

Pedal=your bike
Peddle=A myth

Sorry but I can't stop seeing it.

Just looked up my old nursery on companies house, they have 3 nursery's in the group. 2021 they made a profit of £120k. There are three shareholders so assuming they took the whole lot out and didn't leave any in for growth or staff bonus etc. that's £40k each. I wouldn't run a stressful risky business like childcare for £40k dividend a year. Of course they may all be earning £100k on top. But in that financial year that would be daft as it was far more tax efficient to take dividends than earn through PAYE.

If they are a reasonable example. I would say they were a low return company for the stress and risk involved in running them. Must be 50 odd staff to manage, inspections, insurances, masses of H&S. Relying on low paid staff.

Nope, not for me. I'd run a mile.

They are private businesses, so they are there to make a profit. So what they are saying, they are struggling to make a profit

to solve the problem the government needs to have lots of state owned nurseries where there is no need to turn the profit.

same with GPs btw, if they were just NHS employees and not private businesses it would have been better for everyone

My BIL’s sister runs a chain of Montessori nurseries in the South East. To say she is raking it in would be the world’s biggest understatement.

Of course they are making a lot ! My SIL runs a nursery and is doing extremely well, I think that people like to assume all nurseries struggle and a lot don’t.

The government pay up to 85% of childcare costs if you’re on UC. They pay rent too for those on UC but there’s so much hatred to claimants getting seemingly huge amounts but in reality it’s going to landlords and nurseries !

Have you ruled out them also paying themselves a salary? Or taking dividends before that profit?

I bet the landlord is making a killing.

My friend's husband bought an independent nursery (as a 50:50 partnership with a friend at the beginning of the year). I was telling her that it's difficult business, saying the same thing as people here - high costs, government funding etc...but she didn't seem too worried.

She said his take home after expenses, tax etc is expected to be circa £200k according to last year's accounts.

Nope as I said they may well have been paying themselves a salary as well however in that tax year paying a larger salary and smaller dividend would be a bit daft as far as tax efficiency goes. So if I were a shareholder in that business I would have been taking a very low wage and a huge dividend to get as much money as I could. My hunch would be they are on around 80k between dividend and salary. Which is a large income, especially compared to their low wage staff. But not large enough for the stress of a business like that with so much responsibility and regulation.

You can look up their financial statements on the Companies House website and see if they are making a loss of profit, and if so how much.

Its not a big mystery.

Same as care homes really - i know a few in private equity who have moved into this sort of business. Making eye watering amounts.

1. Their salaries are a labour cost, so would be deducted prior to determining profit.
2. Dividends are taken from after corporate tax profits minus reinvestment.

It depends on the nursery. Some smaller independents are struggling. The larger nurseries that are part of a chain are not. They're backed by investors - often foreign investors.

The whole funding issue has now become a smoke screen to hide the Government paying public funds to shareholders. We know that at least one of those shareholders was the PM's wife.

You didn't honestly think Jeremy Hunt had your interests at heart, did you?! 🤣

It is the owners of the land/buildings who are profiting. The nursery operators pay massive rents to offshore companies, which are often owned by the same people who own the nurseries. They then make a loss on operating the home, so they don't pay tax, while making large profits through offshore companies which don't pay UK tax..

Exactly the same goes for care homes: https://www.mirror.co.uk/news/uk-news/care-home-operators-beg-taxpayer-17553469.

Struggling probably means the nursery managers are finding it more challenging to keep within the budgets they have been given to run the nursery.

Those budgets are set to keep the profits at the same level to pay those directors fat salaries and buy Porsches, not that the directors are living on beans on toast.

Same with care homes for the elderly. My SIL is a home manager and her budget per head to feed her clients 3 meals a day + snacks and drinks
are shockingly low. It was a few years back she mentioned it and I can remember saying I spent more feeding my dog each day!

The whole funding issue has now become a smoke screen to hide the Government paying public funds to shareholders. We know that at least one of those shareholders was the PM's wife.

^This. Today’s example of the PM siphoning off wealth was the announcement of £240m to modernise the GP phone system to tackle the morning rush to get a GP appointment…..(sarcasm). What is needed is to increase the # of GPs so we have more appointments, not spend £240m on a bot to answer the phone with a labyrinthian set of menus. Guess which company loves automated phone systems and bots? Infosys, owned by Mrs Sunak and its increase in value driven by U.K. government contracts increased their wealth by £100m this year alone.

The £240m should imho go to fund University bursaries to encourage students to study general medicine without going into massive debt.

Not a useless bot managed phone answering system
https://www.gov.uk/government/news/all-gp-surgeries-in-england-to-have-digital-phonelines-by-march

I can see why nurseries would be struggling if they’re not topping up. Mine always required top-ups and I’d much rather a sustainable business with good provision than a nursery cutting corners on staffing ratios etc. the nursery my children went to were above ratio for example and sent out some fairly strong communications about that when there was talk about reducing staffing numbers by the government. Realistically I don’t think it’s possible to run a good nursery on the government subsidy alone.

I am involved with the tax preparation for the small (4 branches) nursery group my child happens to also attend. They achieved £1million in net profit two years back.

! £1m net profit!
😲

I voted YABU only because they are a business, and their only reason to exist is to make a profit for the shareholders.

Unless you are in a public sector job, I'm sure you know your company needs to make a large profit to be viable?

Thanks Captain Obvious.

Why bother if you’re not going to read beyond the title?