Council terminates £8m nursery contract due to ‘underinvestment' in staff

Cheshire East Council signed a nine-year deal in 2011 with Safehands to run three nurseries based in children’s centres on school sites in the most deprived areas of Crewe for a period of nine years.

Despite all three nurseries having a “good” rating from Ofsted, the council said it has decided to trigger a five-year “break clause” to end the contract, which is worth £8m, early. The nurseries provide a total of 171 places for under-fives.

Notice has been served by the council, with the contract now due to end on 18 July.

“While Safehands received some sustainability funding in the initial set-up of the contract, it has been making a substantial profit over the past few years," a council report states.

“While the current provider has very strong control over costs and can run the provision at a profit, this can only be done by controlling the single largest cost, which is staffing.

“The current delivery model relies on keeping staffing costs low, with the majority of staff being employed at or close to the minimum wage, with the subsequent impact on the quality of staff that can be employed.”

The report, which was put together by Cheshire East Council's director of children's services Kath O'Dwyer, adds that the council's early years team and the co-located schools "continue to be concerned about the consistent quality of the provision".

The council is proposing to re-tender the contract to a not-for-profit organisation.

“A not-for-profit option would seek to reinvest this money in the settings in a staffing model that would allow for better qualified and experienced staff, and better resourcing of the buildings leading to better outcomes for children in Crewe,” the report states.

Safehands has been contacted for comment.