Schemes, however well intentioned, can have unforeseen negative consequences.
Few would argue that the availability of free childcare to three and four-year-olds is a bad idea. The scheme allows working parents to get at least 15 hours of free nursery provision per week and for some this is doubled to 30 hours.
In the UK, such a scheme seems particularly necessary. The UK has some of the highest childcare costs in the world and the cost of childcare as a proportion of average wage is staggering. In Britain, a couple might expect to spend 35.7% of their income on childcare, only New Zealand has a higher percentage. Across the EU, the average figure is just 12%.
As we have written about previously, there is also evidence that many mothers work work more hours if only they could afford to.
Set against this, the free nursery provision seems a win-win as it allows parents to work more and so employers benefit too – employees who know the role and only dropped hours for childcare reasons can instead work closer to a full-time schedule. There is less need to hire others, train them and get them up to speed.
Unfortunately, though, there are problems. Private and independent nurseries are closing and in some areas there is a real shortage of provision that many expect to only get worse.
The free childcare scheme, at least in its current guise, is seen as the route of the problem.
Concerns were raised recently in a BBC News article, this referencing an All-Party Parliamentary Group that has researched the situation and found that there is evidence of a reduction in places in deprived areas. Meanwhile, in affluent areas there has actually been an increase in places.
It seems that nursery provision could become available only to those in affluent areas if the trend continues.
Nicole Politis, director of the Portico Nursery Group, who has a number of nurseries in different socio-economic areas, said: “Three years ago, nurseries in these deprived areas were completely full.
“Nurseries in affluent areas are full, and in deprived areas the numbers of children attending are so low that I’m having to close them.”
The assessment of the All-Party Group was grim, stating: “The APPG report said: “Should this trend continue, we risk facing a situation where only wealthy families are able to access childcare services, leading to significant reductions in educational opportunities for children, as well as more challenges to parents looking to go back into work.”
Statistics show that in some areas the rate of nursery closure has increased by 66% since the implementation of the scheme.
The alarming figures have led to calls for the scheme to be amended, potentially with a higher rate paid to nurseries taking children who are entitled free hours. Nurseries are not obliged to accept children using the free hours scheme, it might be that the rate they get paid is far less than what they would charge for a child whose place wasn’t paid for via the scheme.
There is an argument that the rate is too low, meaning either nurseries simply don’t want to accept many children receiving the free hours, or that if a nursery is full of children on the scheme the business then becomes unviable.
One option for many nurseries and those seeking quality childcare provision has been to look into the benefits of the Workplace Nursery Scheme.
While the scheme does not solve the issues of the free childcare offer, it does enable working parents, employers and nurseries to create a mutually beneficial alliance that works in all parties’ financial interests.
The scheme allows an employer to link up with a local nursery, who can then provide places to employees of that business.
Parents (the employees at the business partnering with the nursery) can now have their fees paid for as a salary sacrifice. This saves many thousands of pounds per year and leads to far greater savings than were achieved under the old Childcare Voucher Scheme.
Parents with average nursery fees would typically save around £4,000 per year.
We have a full savings calculator on our sister site for Workplace Nursery Schemes.
The savings also enable many parents to up their hours at work as they no longer have the concern that any extra income is simply being spent on childcare provision.
The employer benefits by creating a benefit that leads to increased staff loyalty and retention and can also make it easier for valued employees to work a fuller schedule.
The benefit costs the employer nothing and is light on admin – when run through a workplace benefits expert the administrative burden is simply a couple of meetings or phone calls per year.
The nursery benefits by having places taken at their standard rate and with all payments coming in one monthly sum, rather than them having to chase parents individually for payment.
The nursery also receives extra funds, this through contributions made by the employer, these offset and so cost the employer nothing.
These payments are to be used to improve the provision and the specific use of the funds gets voted on by parents taking advantage of the workplace nursery scheme.
For parents, this means that not only do they get superb childcare at what is effectively a reduced cost, they also see the nursery get extra funds, enabling it to provide a better quality of childcare.
A workplace nursery scheme does not, of course, solve all the issues of the free childcare offer, but it does enable nurseries to get on to a strong footing, it also builds a relationship between local employers and nurseries that makes long term planning easier – the nursery will know that it will always have a steady supply of children needing places; the employer knows that it can help any new starter who has too factor in childcare considerations.
Using the Workplace Nursery Scheme helps balance out the intake at a nursery, especially in areas where providers find that much of the demand is solely from those looking to use their free entitlement.
The Workplace Nursery Scheme enables parents to work and also afford quality nursery provision, this in turn means nurseries can have a mix of privately paid for places (via the scheme) and also places that are funded through the free nursery hours scheme.
If you are a working parent with children of nursery age or an employer looking to set up a workplace benefit that costs nothing but leads to greater staff retention, please talk to us at Enjoy Benefits.
We are a leading UK expert in workplace benefits, partnering with businesses of all sizes to help them create a compelling range of benefits for employees. All these benefits either save the employer money or are cost neutral, while for employees they can help save thousands of pounds on necessities such as childcare, getting to work, insurance, car and phone purchases and leasing and gym membership.
To discuss your requirements, please call us on 0800 088 7315 or use our Contact Form.