What is it that drives up the cost?

[peepsypops]

I have always wondered this. We all know nurseries are expensive - but what is driving the cost?

Is there anyone here who works in this area that knows?

I'm imagining insurance and heating costs - but I think childcare has been ludicrously expensive prior to energy costs increasing.

I would be genuinely interested to know - I don't get the impression there are huge profits made, so where does it go?

I think it’s pretty well known that the ‘funded’ hours are what do it, because the gov don’t give the nurseries anywhere near enough money for the funded hours and so it drives up the costs for everyone else.

NMW has risen a lot (rightly so) in recent years.

Rents, bills and food are huge.

They used to be exempt from business rates but not any longer.

Food, nappies and wipes, insurance, paper, crayons, paint etc, wages, toys.

Staffing. Sorry to break it to you, but paying people to look after your children does (rightly) cost a lot of money. That's the bulk of what you're paying, the salaries of the people looking after your children.

Not many nurseries own their premises so lease rental costs are a major factor and generally the difference between a nursery being able to survive or not.

This combined with staff wages, insurances, business rates for electricity and other utilities and a food bill for those that provide lunch.

Also staff costs are NMW plus pension contributions (min 3%) plus employers social security contributions (c. 13% usually) plus perhaps bank staff / agency staff costs to cover.

Then you probably need to factor in an IT service cost, an HR service cost or a franchise cost if part of a chain.

Then you've got premises maintenance and the cost of enrichment activities eg books, toys, arts and crafts etc.

Then probably some other stuff I haven't thought of 😂

Finally as PP has noted then the govt say that the cost of funding all of the above is £x per child which actually it's £x+++ so those costs are passed on into the unfunded hours or through a top up.

Ratio at nursery is age dependent but for the youngest it's 1:3, minimum wage including national insurance and pension is over £13 per hour so each child is paying £4.50 per hour minimum just to meet ratios. Rent, utilities, supplies ....

I work in a nursery
The electric bill rose by 10 k
The food 5k
Nappies 3k
Baby milk 4K
Art supplies 2k
Maintenance 11k
Wage bill is through the roof
Calpol and sun cream has risen by 2k
Gas 7k
Plus the funded hours.

The main thing that makes it so expensive is that you have to multiply it by 40 hours (or whatever) each week.

Think about (say) getting a hairdresser to cut your hair. You're paying maybe around £25 or so for an hour, but you're happy to pay that because you only get it cut once every couple of months. Now think about paying someone to look after your kid. We all agree that they deserve to be paid fairly, just as your hairdresser does, but multiplying it by 40 makes it seem like soooo much money.

The only way to have cheap childcare is for it to be subsidised by the taxpayer or to ditch ratios and have one person looking after a lot of children.

All really interesting comments and make perfect sense. Of course I can appreciate staffing is a huge (and necessary and deserving) cost.
Makes you wonder how some European countries are able to subsidise this to a much greater extent than the UK does.
(FYI I'm in Northern Ireland and we do not have funded hours)

Additionally we supply nappies/wipes/suncream to our nurseries also. Not calpol. Interesting.
FWIW, they do Gods work, and I am hugely thankful to them. I just find it crackers that it costs SO much and it is a necessary function like school (free) is in my eyes.

Mine attended a nursery attached to their dads workplace.
Pretty much all the nursery had to fund was the staff and disposable items like crafts and snacks.
The company covered the building costs, the utilities, insurance, accounts etc.
The nursery couldn't make a profit.

It then cost us about half what a private nursery would have cost. Everything adds up!

I know that France (for example) has higher tax rates than the UK and also has a ratio of 1:8 for children age 2 (whereas the UK ratio is 1:4 I think?). To be honest I would be in favour of revising ratios to make childcare more affordable. I guess some people would disagree though.

Rent and electric I'd say

Can't say it's wages or anything else as childminders manage to run a business and charge at least 30% less ....

School isn't free though. It's just what the government chooses to pay for.

Yes but childminders are self employed so there's no minimum wage, no sick pay, no holiday pay, no requirement for pension provision etc. No additional premises hire costs, as well as utilities not charged at business rates.

Do nurseries actually make huge profits?

staff costs.

one member of staff costs about £120 a day including wages (at around £10 a hour so not exactly raking it in) holiday pay, pension costs, national insurance employer contribution

the ratio for under 2s is 3 children to one member of staff.

so that’s 40 per child per day before you’ve even got into the cost of premises, heating, insurance, management…

Are you a nursery worker?

No, but that doesn't mean I'm not entitled to an opinion.

How old are your kids?

I didn't say you weren't.

The current ratio is 1:5 2 year olds, I wonder how you would safely cope with 6 or more 2 year olds. For the same money. I suspect you'd drive even more workers away from the sector with that change.

This.

This issue is, that you have to pay it, if you are out at work.
Typically, people with small dc, are more likely to be the same people that are fairly early on in their careers (so not earning as much as they might do later), and also people statistically likely to be in the earlier years of their mortgage.

As Lemon says, you wouldn't consider it unreasonable to pay £30 / £40 / £50 an hour for your plumber, or to get your nails done, or your dentist, but you don't have to pay them 9, 10 hours a day x 5 days a week, with no option to choose not to.

Do you work in childcare? The ratios are really stretched already. If it were 1:8 on 2 year olds, what would it be for 3 year olds? Plus there are increasing numbers of children with SEN, who are not yet diagnosed, and require 1:1 but not funded as such until diagnosis. It's really hard work to do for minimum wage and you will have even fewer people wanting to do it. You would have to wonder what will suffer, but likely what would suffer is firstly: safety, secondly/ learning/ teaching, thirdly: quality relationships with a key person (which is vital to child development).

........and that would be if each room were full for every session.

If there is one baby, you still need one member of staff, so the cost of that member of staff is borne by one family, not divided by 3.

Same with 3 and 4 yr olds. Once you go over 8, you need a second member of staff, but rather than the cost of 2 members of staff being divided 16 families, it is then divided by 9 families.

But you also have to cover staff who are entitled to a break, to sick leave, to maternity leave, to annual leave, to time to go on training they need (Safeguarding, First Aid, Food Hygiene, SEN Training, OFSTED training) network meetings, meetings with parents, meetings with outside professionals, etc. So it is a lot more than just the cost of that member of staff.

1 member of staff for 8 children aged over 2! I'm glad I don't work in France. 1:5 is too many really. We have so many SEN children aswell who are still in 1:5 and it breaks my heart when they don't get the extra attention they need.
Costs are mainly staff, who are on minimum wage and if course those free hours. It's going to get worse now that free hours have been expanded to all age groups m