| With increasing numbers of families in a situation where both parents have to work, childcare is becoming a necessity rather than a luxury. According to consultancy firm Laing & Buisson, the number of day nursery places grew by 7.5% between 2005 and 2006. There are now almost 700,000 places in the UK overall, spread between 14,590 nurseries. Over a quarter of all working parents use day nurseries, which now account for a third of all childcare in England. This increase is not just the result of the fact that a majority of women – 58% – with a child under one now work. Only one in 10 employers help their workers with the cost of childcare. Government support The real boost for the market has come from the Government’s increasing focus on the area. Initiatives such as the Child Tax Credit – which provides around 353,000 families with incomes under £59k, an average of £53.30 per week towards childcare – have helped drive the market. Gordon Brown’s famous Working Tax Credit also offers employed parents up to 70% of the cost of childcare, a maximum of £175 per week for one child and £300 for more than one. The market is now worth an estimated £3.4bn, £2.7bn of which comes from the private sector. Not for the faint-hearted Clearly, there are increasing opportunities in this sector for the entrepreneur. But it is not a profession for the novice, or those averse to long hours, serious responsibilities and stringent organisation. While there is profit to be made, it does seem that running a day nursery is a vocation. Purnima Tanuku, Chief Executive of the National Day Nursery Association (NDNA), the representative body for day nurseries in the UK, explains: “Nurseries are not for people who want to see a huge profit as financial margins are very tight. “Those running a nursery have large demands placed upon them – from making sure that enough staff are in place to ensuring that the nursery meets stringent Government regulation in terms of standards of care and safety, all while balancing the books. “On top of the hours actually spent open, there is work around planning and paperwork.” Anyone running a nursery needs a minimum of NVQ level 3 in childcare and two years’ experience of working with children. Tanuku adds: “You must have a strong commitment to ensuring that children receive the best possible care. Lots of other common business skills are also crucial – for example, you will need to employ a staff team, work closely with parents, as well as ensure that your setting meets a whole host of regulatory requirements.” Stringent guidelines As well as insurance – an absolute must in this sector – anyone considering running a nursery needs to take a close look at the National Daycare Standards published by the Government. This guidance sets out various 'minimum levels' for the amount of space and staffing per child, the qualifications of carers, and so on. For example, there must be one adult carer for every three children under two years old, one for every four two-year-olds, and one for every eight from the age of two up to seven. In addition, half of your staff must be qualified to a minimum of NVQ level 2, while carers in a baby room require specialist training. As you may already have guessed, wage costs are likely to be a large portion of your total costs, even when property is taken into account. The average hourly wage for qualified nursery employees stands at £6.94, with managers taking home around £7.91, and unqualified employees just over the £5.30 mark. The NDNA estimates that the average capital cost per nursery place is £15k. Tanuku says: “Anyone who opens a nursery shouldn’t be doing so with the plan to make a huge profit – times are currently very challenging for the sector. Any private or voluntary nursery relies on parents’ fees to remain open. “When costs rise – wages, business rates, employment – you are forced to pass the cost directly to your parents. However, many cannot afford to pay this extra amount and many nurseries are forced to absorb this cost to prevent parents looking for cheaper childcare in the maintained sector. Not all doom and gloom “On the plus side, you will be caring for children in their formative years and helping them get the possible early-years care and education,” she says. Clearly, running a day nursery cannot – at least in the short-term – purely be for those who have no interest in the sector other than taking a profit. You need to have a real dedication to caring for children if you are to make it a success. However, the Government seems intent on continuing to pursue child-friendly policies – and wants to encourage employers to take a greater share of the burden. In countries such as Sweden, there is plenty of evidence that state-funded childcare has provided a great boost to the economy, as women do not have to give up work when they have children. And with hours and wages continuing to climb upwards, there is the possibility that the sector could boom in the near future.
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