Recession and increased staff costs cause nursery fees to soar

Laing and Buisson's Nursery Sector Report found that in 2009 fees rose by four per cent on average, roughly double the average rate of inflation that year.

This sharp rise follows five years of below-inflation increases and has been fuelled by the need to meet increased staff costs caused by workforce reform aimed at improving qualifications in the sector.

Recession has also been a factor. Laing and Buisson found that during 2009 the market had contracted by 3.4 per cent. Just under half of nurseries surveyed by the firm said their financial performance had worsened during the year.

The National Day Nurseries Association's membership, policy and communications director Claire Schofield said: "For many years, nurseries have worked to keep fees in check and as this report highlights these have often not kept pace with inflation, but with wage increases, the need for a better rewarded workforce and continued issues with funding for the free entitlement, most have had no choice but to pass some of the cost on to parents."

This latest research also highlighted a four per cent drop in the number of children attending nurseries during 2009, with the recession and rising unemployment leading families to scale back their childcare costs.

The final phase of the government's expansion of children's centres saw an increase in places during the year, although Laing and Buisson notes that the number of nurseries fell, with many forced out of business due to the recession.

There are signs of recovery going into this year though. During 2009 the average vacancy rate was 20.5 per cent but this had reduced to 17.5 per cent in March this year.