Can nurseries deliver the 4th emergency service and remain sustainable?
Friday, April 3, 2020
Perhaps when Boris has his new baby and needs childcare he will finally begin to realise what we do as a sector and how we operate as an essential business.
So far, many parents have been generous and kind recognising immediately the simpler economics of our organisational model and offering to pay fees and giving donations. This is on the basis that they recognise the crucial service we offer and want us to be able to continue it when this is over.
It’s simple. Business has to find ways to survive and thrive in an uncertain financial climate and that is a bigger challenge for a social enterprise which is focused on delivering a social purpose; in our case high quality childcare.Therefore, as a social enterprise we are not highly leveraged or carrying lots of reserves. The cash we have in the bank pays our monthly £1m+ pay roll (i.e. 70% of our outgoings). Once the cash is gone, there is no money. As a responsible social business, we always try and have enough cash to pay at least two months’ worth of salaries. Some people have read this as having a nest egg. It’s not! It’s cash to pay staff.
Any decent employer is going to want to look after its staff and, like the parents of LEYF children, the majority of our staff have been brilliant. I was delighted to be able to pay them for March and also April. That matters to me as staff in Early Years are on the lower pay bracket and so they are less likely to have savings or a means of stretching their outgoings. In fact, up to 40% of staff in the Early Years rely on basic benefits to top up their salaries – 10% higher than other female workers.
The arrival of the furlough came after I had made some immediate changes that would allow me to pay staff in full for two months. But here is the challenge. We are a social enterprise and very proud to have developed our unique business model and pedagogy in order to balance our service so we can subsidise many children from disadvantaged families and communities. These parents would otherwise not be able to afford the great benefit of a quality early years education for their children.
So obviously, we wanted to offer a service to essential workers and vulnerable children. As an ex-nurse, I totally recognise the pressures that the NHS hospitals are under – especially those at Kings College where I did a placement. But it leaves us with a dilemma.
In just one week, we went from earning fees from over 1,300 children to just 168. We therefore could not justify keeping all our nurseries open so we put them into 18 hubs and kept our two workplace nurseries going. The moral challenge here is balancing the social mission with the safety of our staff commuting on crowded tubes, waiting for longer at stations and facing the risk of cross infection when they are all advised to stay at home. The decisions made by TfL appalled me which included delaying trains so people are forced to commute like sardines. Meanwhile, the buses and Overground continued a more regular service and people travel more safely. We are trying to mitigate this by doing a deal with some taxi companies to reduce additional risks on their journeys to work.
To keep the staff safe, we introduced shorter shifts with more people and wider breaks – so our employees would be at home for longer – allowing us to rota the services of our staff more widely. But we know that during this crisis, essential workers are likely to work additional shifts to meet the surge in demand for critical healthcare and the flexibility of childcare provision – not just the total hours available – will be an important consideration. We have created an offer for the NHS to offer places or a specific 24 shift offer but it has a cost. Do the Maths! Developing a new flexible service and retaining the same service at the same cost but with income from just under 200 children? Read the IFS report which tells a very interesting picture.
If I furlough the staff, then I cannot run this service – but I will have at least 80% of salaries paid for most staff. In fact, at another endless video conferencing call the other day, a leader of the local authority noted how so many people failed to understand our business model. That was not reassuring as I crouch over my laptop for up to 14 hours a day trying to figure out how to keep all these balls in the air.
To those media bods who love a negative story, this is the reason we cannot open all the hours and everywhere. We cannot afford to do this. We have no guarantee of income support, we have mixed messages from government as to whether we will get the funded payments for the vulnerable children who would be starting with us and we have had only some holiday payments. Some landlords are still asking for the rent. The suppliers are still demanding payment and the business interruption loans are proving complex to access. We are reducing our fees to 10% and that is to secure the place on the child’s return but we understand that even this is difficult for some parents. Not everyone can rely on a contract which pays them in full for such situations.
This is the time for a public conversation about the fact that childcare is part of our infrastructure. It’s not a tacked-on service available only to those who can afford it. It is the 4th emergency service – a point that took our Secretary of State for Education a long time to recognise. The schools are in a much better place – their staff get paid no matter what. They have been given extra emergency funds and additional resources and mostly some great recognition. No one is complaining that so many of them are shut, including the maintained nursery schools. Contrast this with us having to rely on goodwill and donations?
The truth is, children under five years matter. They matter a great deal. This is the question we should be addressing not carping that nurseries are not open. The press needs to be explaining why we cannot open to all the NHS staff who so desperately need us. If it was up to me, I would pay the sector extra so that we could subsidise all emergency NHS childcare places.
Furthermore, and aligned with the Institute of Fiscal Studies, additional key changes in policy by the government should include:
- Relaxing eligibility restrictions on the free entitlement for from 30 to 40 hours
- Extending the 2-year-old entitlement (not just the 40% of the most disadvantaged)
- This would provide income to early years providers and potentially valuable support to essential workers.
Also, and potentially costly, working within the existing systems of childcare support could help the government to implement changes quickly and provide assistance to key workers struggling to modify their childcare plans. Every extra hour key workers can work could help get the country through the crisis.
Please understand the simplicity of our business model but also the complexity of its operation when you are trying to do more with much less. Don’t go into battle with us. Take this time to recognise that a country where 75% of the families have two parents working need the childcare sector as a support and a comfort whilst the children need it to strengthen their learning and development. Now is the time for a new partnership to be formed.
June O’Sullivan is chief executive of London Early Years Foundation. This blog first appeared on the LEYF website