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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