The 4 key assumptions behind the ratio savings model

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Following a freedom of information request, the coalition have revealed the assumptions behind the argument that relaxing childcare ratios will improve quality and reduce the cost to parents.  Their modelling of the childcare equation implied that by reducing the cost of caring for each child,  prices to parents would fall between 12% and 28%, however these claims have been widely rejected by the industry.

The DfE have modelled a ‘stylised’ nursery to deliver increased revenue of over £200,000.  They assumed the 48 places  were increased to 73 with the new ratios, and that the nursery was open 52 weeks of the year, charging £4 per hour.

There are, however, some underlying assumptions in the maths:

1. All providers are at capacity and will adopt the new ratios

In order to show any savings, the DfE have to assume that providers will move to the new lower ratios, and to get 28% savings to parents, they would have to be at full capacity every day of the year.  This could prove problematic given the average occupancy of 80% and resistance from the industry who have real concerns over quality.

Parenta’s own survey asked “will you change your ratios” and returned an overwhelming “No” vote at 96%.

If this stance is maintained, it is difficult to see how the proposals will have any impact whatsoever.

2. No pay increase for existing staff

In the example provided by the DfE, there is an assumption that two non-graduate staff are replaced with Early Years Graduates, enabling the over 3’s care to switch to a ratio of 1:13.  It is then assumed that, when their increased salary is taken into account (£33,250 in this example!) and all savings are passed onto parents, the other staff will see no increase in their pay whatsoever, despite the extra demands being placed upon them.

3. Higher ratios for under 3’s, but no increase in carer qualifications

The example given by the DfE assumes that higher ratios are put in place for over 3’s, thanks to the two new Graduates in post, and that they focus their working hours on this age group.  There is no allowance made for upskilling those caring for children under 3, despite the move to 1:4 for babies and 1:6 for 2 year olds, and no increase in their pay.

4.That the provider is profitable, but will not increase profits

Despite 2012 figures showing over a quarter of nurseries failing to make a profit, and therefore presumably unable to pass any savings onto parents, the DfE has assumed that all providers are happy to see no improvement in the bottom line and pass every penny “saved” onto their parents.  This is coupled with no pay increases or additional investment in improvements or resources.  Hardly a long-term sustainable model.

The full report  and ‘Ratios economic modelling‘ document are available for download here

 

 

 

 

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22 thoughts on “The 4 key assumptions behind the ratio savings model

  • June 4, 2013 at 11:20 am
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    There are plenty of ways government could better fund childcare so that our staff are better paid (hence more quality staff available) and make parents fees cheaper, by looking at their own internal processes and those of the councils across the UK. There is so much variation in how each council runs their sure start and pre-school education programmes. We have nurseries in different counties and find the differences unbearable, to the point where we will pull out of one particular county, as they are very difficult to work with and put extra costs upon us which are not necessary. They also decide how to spend the money they get from government. In the aforementioned council they have a business advisor to tell us how to run our businesses! The money to pay for that comes out of the nursery education fund and they therefore pay us less! When will the government take control of this sector and start to realise that private providers can provide a service that they are funding through schools in a high quality way (we are outstanding) in a lot of areas? We cannot compete in one county because every child goes into a place at nursery school in state schools and parents are pushed into a school place rather than going to outstanding private nurseries – more school places are then provided instead of using the capacity already in existence. We provide that same quality (and sometimes higher) free education, but manage to spend government money more effectively in delivering it than schools do. Sure start centres – whilst they have a purpose in a lot of areas – deliver childcare in competition with emptier private providers at a massively higher cost! Two centres were losing £250k per year (and there were 9 in the council mentioned – imagine that black hole). No wonder parents want to go to the sure start centres when they seem to have a bottomless pit of money and it is OK to lose a fortune in taxpayers money! Have a closer look at each county and I’m sure they’ll be able to allocate the same money that is spent now to provide quality, cheaper childcare without touching ratios.

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  • June 3, 2013 at 5:34 pm
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    So am in right in understanding that the proposal to change ratios has come from a desire to reduce nursery costs to patents/local authorities rather than any evidence that the proposed ratios will give the children an equivalents level of care? I believe savings can be achieved by doing things better, not by deciding what the savings ‘should’ be and then working out ratios of staff:children. If so Nick Clegg was right on this one.

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  • June 3, 2013 at 4:53 pm
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    There is already a very biased response from governments towards early years education with the basic structure of private providers vs schools.

    Schools pay no VAT, council tax etc – thats the basic issue here – treat us as educators.

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  • June 3, 2013 at 12:02 pm
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    Without entering into the wider debate surely 4 vital points are being missed:
    1. These changes are not compulsory so it is open to each setting to make their own decisions as to welcoming the ratio changes or not – so why should those who oppose them think they can cover all bases. There are many different philosophies for the way we nurture children in nursery settings and, certainly with the Montessori Approach, the freedom and autonomy so highly valued would I feel welcome the increase in ratios for the over 2’s.
    2. Isn’t it natural that parents would oppose an increase in ratios? They will not be looking at it from an objective point of view, or with any real knowledge of any benefits the increases could bring. To say the majority of parents oppose the changes seems understandable, but not evidence in itself.
    3. Experienced practitioners will know that it is not the number of teachers which sets the standards, but the knowledge of how important an enabling environment is in setting children free to develop naturally their sense of personal value, their independence and their love of learning within a setting where the welfare of children is of the highest quality.
    4. Although I oppose an increase in ratios for the under 2’s, we need to remember that with an increase from 4 to 6 children for the 2-3 year olds, members of staff do not have these children in isolation as it is against early years requirements where a minimum of 2 teachers are required to be withing the environment at all times. In a quality setting, this is not a ‘tall order’
    Finally, with the intensive tinkering and changes this government and the one before have seemed unable to resist, should we not all welcome some autonomy being given back to the sector.. This is long overdue and time now to trust those who are providing quality care and education for our young children, without the constant policing and interventions which change almost like the wind.

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  • June 3, 2013 at 11:49 am
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    What I find worrying is the Government make decisions such as this with clearly no understanding of what they are actually talking about, if this bill had been passed despite massive objections from the industry who knows what chaos it could have caused. The idea of the government proposing to tell professionals how we should be trying to reduce costs for the parents in this idiotic manner is quite frankly insulting. This is the same government who made it mandatory to increase every apprentice salary to the relevant age band once they have worked in a setting for 1 year regardless of how good they are or how long it takes them to complete their level 2 or 3. I have some apprentices who are fab and work really hard and I subsequently reward them by increasing their salaries to reflect this, others struggle with the work are clearly not interested and constantly off sick taking years to get their level 2, yet we now have to increase their salary to almost double, and don’t get me started on the farce that is the Governments involvement with the sure-start schemes.!!!!

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  • June 2, 2013 at 10:37 pm
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    Graduate level posts are a good thing for educating children – however CARING for a group of children requires that there are enough adults to go round, and no graduate under the sun has more than one pair of hands – as a graduate in a school nursery class, doing indoor and outdoor play I had to ignore the 12 children in my care to help 1 use the toilet!
    I agree with Val Wells above that never have I read such drivel.

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  • May 31, 2013 at 7:19 am
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    we are now instigating our plan to create a very chaotic & disorderly society it starts with the young and the softly softly EYFS approach, this way when the children grow up they have no morals,self respect or respect for others ,a recipe for a completely chaotic materialistic society.
    A divided society is much easier to control and move to our masonic / satanic ways.
    so providers you will do as we say or our puppets known as OFSTED will close you down !!

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  • May 30, 2013 at 12:33 pm
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    The Government are a complete joke – must be a statistician totally ignorant of the Early Years sector and the constraints within the sector that has come up with this ridiculous model – they’d make you laugh, if it wasn’t so important to get right, totally clueless in my opinion and I love how under the Freedom of Information Act, they have now been made to look like the idiots they obviously are! I shall ignore them completely … they can bring in what they like, it will be like water off a ducks back. Someone, please save us!

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  • May 30, 2013 at 11:52 am
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    The whole reason for current guidlines and regulations were a result of overcrowding, unqualified staff. lack of continuity across the country and poor outcomes for children in the childcare sector. The government appear to be trying to undermine all the hard work it has taken by all professionals working together to improve these outcomes. I am totally disgusted by these proposals.

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  • May 30, 2013 at 11:49 am
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    I agree with Sarah and others. In the example given, it isn’t about increasing the numbers and therefore the revenue, its about the available space, and to take on the new ratios, simply means less staff and not more children. The cost saving of this is minimal, if not non existent once the higher graduate salary is taken into account.

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  • May 29, 2013 at 9:59 pm
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    When is the government going to listen to the people/professionals who actually work with children? Will someone please put someone in charge who actually knows what they are talking about when it comes to Nursery schools. They clearly are not taking into account their own rules as per the EYFS code of practice on meterage per child. What state are we living in? “pile it high sell it cheap”? Idiots! Advice to government:- read your own rules, then take into account your rules before passing onto us the changes you want to make that take into account the rules you set! Call yourselves education ministers? Joke!

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  • May 29, 2013 at 5:43 pm
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    er…..how can nurseries increase capacity unless the floor space per child ratio is relaxed and I have not seen any mention of that. Am I mistaken somewhere?
    Yes there would need less carers for a group of children but a nursery cannot increase their capacity……surely!

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  • May 29, 2013 at 3:37 pm
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    I wonder which “boy /girl wonder” dreamed this up? Very creative! They could make a square peg fit in a round hole!!
    They are obviously not aware that many settings are limited to how many children they can have by local authority planning departments. Or will they relax planning regulations as well!!

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  • May 29, 2013 at 2:07 pm
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    I totally agree with Sharnie’s post, if we are permitted to operate our business we should be allowed to make sensible decisions in relation to staff deployment. Like many other providers I have a percentage of ‘unqualified’ staff that are more than qualified to care and educate the children.

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  • May 29, 2013 at 1:58 pm
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    If every child really matters and if every child is realty unique, you cannot heard them together as the new ratios suggest, it shows no respect for the needs of the children and the trust parents have in the settings. First and foremost, the parents trust us to look after their most precious ‘possession’ their child, and we can only do this trust justice if there are enough hands and minds available. Like it or not, early years tends to be labour intensive, when for instance, children have toilet accidents, or are feeling a bit miserable, it can take some time to sort it out.
    Early years professionals are great, but so are people with other kinds of education who want to work with young children, they may have degrees in philosophy or anthropology, or whatever, they bring new depths and knowledge to a setting and I wished this was recognised when we have to put down people’s qualifications.
    The 15 hours of free tuition the children after 3 years of age receive is crippling, we get £ 3.79 per hour. Lots of parents would be only too happy to bring this up to a reasonable rate of maybe £ 4.80 to 5.–. Settings who are open all the year round or who have babies charge accordingly and finish up by letting babies subsidise the funded children. That can not be right. If it was possible to top charge on the 15 hours, and lots of parents would be happy with this, we would be able to pay staff a more realistic wage. It would then not be necessary to charge babies and the younger children so much more.
    In order for early years provisions to be safe, you n e e d hands a n d heads. These years are important and should be enjoyable, magic and full of fun for the children. Nothing less will do.

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  • May 29, 2013 at 1:38 pm
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    The invisible hand that regulates the market will dictate outcomes. Business efficacy will prevail.

    Good or bad that is what will happen.

    Gary Wilson

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  • May 29, 2013 at 1:05 pm
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    This is insane, completely unworkable, and we definitely won’t be doing it in any of our nurseries, backed by 90% of our parents who don’t want us to change the ratios any more than the staff do, even if it had meant parents were to get reduced fees and staff were to earn more. We’d like to be exempt from Business Rates though, like the schools, that would be a saving we could pass on to parents.

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  • May 29, 2013 at 12:53 pm
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    Has anyone spared a thought for the children in this? When you are three years old, sharing mummy/daddy with one other sibling is hard work, let alone sharing the ‘teacher’ with 12 other needy children! I am worried that it will take a serious accident to a child before anyone takes the workforce’s thoughts and feelings seriously.

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  • May 29, 2013 at 12:46 pm
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    Why do they think they can presume to understand and dictate how we run our business. Most Nurseries are just that a business. The individual needs of a business, its expenses and income are extremely varied and dependant on a multitude of factors, staff costs is just one of them. As correctly pointed out by Ms Sargent, the number of children is determined by floor space.

    What would really help, is if we received a VAT exemption and if our staff were given higher tax breaks. This will enable them to take home a decent salary and help us keep our cost of staffing down, whilst maintaining the quality of care.

    In any event, a qualification does not go a long way in determining the quality of care. I have employed plenty of ‘qualified’ staff who do not meet my nursery’s standards when it comes to care and therefore have been let go. I also currently employ many ‘experienced’ staff who do not have any qualifications but are worth ten of my ‘qualified staff’.

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  • May 29, 2013 at 12:38 pm
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    Sarah is so right. Obviously the government advisers who helped instigate this crazy proposal had not heard of Ofsted or the Standards other than ratios which daycare providers must comply with. This perhaps suggests that we have an ill advised government who don’t really know what they are doing. Heaven help us all.

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  • May 29, 2013 at 12:37 pm
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    I have never read such drivel!! Apparently being a graduate suddenly makes the practitioner ‘superwomen/man’ because clearly being so qualified gives you an extra pair of hands/eyes/ears. I equally agree with the previous post that nurseries have to comply with square meter measurement per child. Well, you know what they say about assumptions – making an ass out of you and me, certainly correct in this case!!

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  • May 29, 2013 at 12:18 pm
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    Do they not realise that the number of places available in any nursery is usually determined by the available floor space – not the number of staff; you staff for the spaces, not the other way around. How fabulous – just being able to increase your numbers from 48 to 73! Although you wouldn’t be able to fit in all those tables and chairs for the two year olds to sit down whilst they learn to read and write and no more ‘chaotic’ running around – they won’t be able to move!!!

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