Childcare is increasingly becoming part of the benefits packages employers offer to recruit and retain staff. The Government has given this further impetus in the budget by increasing tax and national insurance exemptions and providing funds for workplace nurseries.
The recent Laing and Buisson annual nursery market report showed that employers spent 420m in 2005 - 12.5 per cent of the total market - either on direct provision through workplace nurseries or on corporate childcare vouchers.
In his budget, Chancellor Gordon Brown announced the tax and national insurance exemption would be raised from 50 to 55 a week on the costs of registered childcare. That equates to 243 a month and just over Pounds 2,900 a year. The Government also surprised many in the sector by providing 16m over two years to help small- and medium-sized businesses create workplace nurseries.
Busy Bees managing director John Woodward has first-hand knowledge of the explosive growth in childcare vouchers and how chains have worked closely with employers to set up and run workplace nurseries. He says, 'On vouchers we were turning over 2m a month - around 24m a year - in April 2005 when the 50 exemption first came in. Now we are doing 7.5m a month, so that would be about 90m a year. In 20 years we convinced about 20 employers to develop workplace nurseries and in the last 11 months we have got more than 4,000 new companies involved in vouchers.
'Our business is growing by 10 per cent a month and with the additional money on the exemption it could go up by 12 per cent a month.'
Accor Services, the other major voucher provider, which numbers the Royal Bank of Scotland, Lloyds TSB, the Treasury, Ofsted and the Foreign Office among its clients, is also experiencing a massive increase in business, according to corporate business manager Anne Ross. The volume of vouchers issued has grown rapidly from 18m a year four years ago and she says the voucher business has transformed in that period.
Flexible care
In its response to the budget, the TUC welcomed the extra exemption but said, 'The recent focus on childcare vouchers has seen some workplaces shut their on-site childcare support and replace them with vouchers.' It added that the support for small- and medium-sized businesses 'may help to reverse that trend'.
John Woodward, whose company operates childcare facilities for companies including Land Rover, rejects the suggestion that vouchers undermine workplace nurseries. Vouchers, he insists, 'provide complete flexibility'
and mean broadened parental choice of care, including childminders.'
Argos Retail Group (ARG) launched a tax-free childcare benefits scheme for its 45,000 employees earlier this month (see News, 20 April). The scheme, managed by Kidsunlimited, offers parents places at a range of partnership nurseries, run by ten of the largest nursery groups in the UK and Ireland.
Alternatively, parents can receive vouchers to use at other providers. ARG is the second business to sign up to the partnership scheme, which offers parents substantial tax savings under workplace nursery regulations.
Sue Jex, head of employee relations and diversity at HSBC, says the company uses workplace nurseries and vouchers. Some of what the company describes as workplace nurseries are on site, while others are in partnership with facilities close to HSBC branches run by chains such as Kidsunlimited where a discount is negotiated.
She says HSBC opted to complement workplace nurseries with vouchers because staff in remote areas were less likely to have nursery access and the vouchers can be used for children aged five to 16.
Susan Hay, chair of Bright Horizons Family Solutions, which has successfullly worked with employers to create sustainable workplace nurseries, believes 'vouchers have raised awareness that childcare is a normal part of an employee's benefits package'.
She says that companies are now keener to set up workplace nurseries because 'they realise that vouchers only take them on to the first rung of the ladder in terms of childcare', providing a means to pay for it but not addressing issues such as quality.
She welcomes the 'relatively small amount' of money allocated by the Government to help small- and medium-sized businesses, and believes it could be 'stretched' to good use if the Government lifted the requirement for landlords to charge VAT on nursery buildings and made planning more straightforward.
'I am not talking about relaxing planning regulations,' she adds, but argues that they could be simplified and clarified so that businesses would be less likely to need specialist advice or extensive use of a solicitor.
The current model for workplace nurseries is 'probably only suited to large businesses', but she is delighted the Government has started to address the issue and believes partnerships between small- and medium-sized employers would be the most sensible route.
John Woodward agrees that partnership between employers and care providers would be the obvious model. Busy Bees has recently set up a nursery with a Norfolk health trust. 'They provide the site, we fund the building. They use some of the places for their staff and we sell the rest to the local working community,' he says.
Business benefits
Rebecca Gill, policy officer for women's equality at the TUC, says a major drawback to workplace nurseries is that 'they don't service many people'
and that 'staff don't necessarily want to bring their children to work'. A feasibility study was recently carried out into a workplace nursery for Ministry of Defence employees in Glasgow, but they opted instead for vouchers because they wanted their children cared for nearer home.
While Ms Gill welcomes the Chancellor's assistance for small- and medium-sized businesses, she also believes employers are 'not yet convinced of the business benefits of workplace nurseries' and that childcare is still an issue which many people regard as 'a private matter' and not something they feel comfortable with discussing with their employer.
In Northern Ireland a government-supported charity, Employers for Childcare, helps companies deliver employer-supported childcare, whether in the form of vouchers, workplace nurseries or out-of-school clubs. Marketing officer Lynne Herbison says companies sign up with the charity and it has a database of all registered childcare which the employers can promote to staff. The organisation also produces a childcare solutions guide for parents and arranges 'lunch and learn' workplace events.
There are plenty of models of successful workplace nurseries among large employers such as banks, local authorities and the NHS (see box). Tara Burnage, manager of the Early Birds workplace nursery at Bedfordshire County Council, says it has remained sustainable for the last 14 years and built a solid reputation among council employees for high-quality care. It demonstrates that workplace nurseries can also be flexible, as it offers teachers term-time only contracts so they do not have to pay all year round, and hourly rates which particularly suit some personnel such as social services carers.
While nursery providers welcome the increased tax and national insurance exemption, John Woodward argues that it should be raised to 100 a week. The Government says it will consult with business organisations about its help for workplace nurseries. Childcare providers will want to emphasise that viable nurseries for this size of business require partnership and the use, where possible, of existing provision.
Case study: Sunshine day nursery, East Surrey Hospital
Sunshine Day Nursery at East Surrey Hospital, Redhill was set up two years ago with money provided under the NHS Childcare strategy. It has been in good health ever since with occupancy levels now at 76 per cent and, according to NHS child and family care co-ordinator Carol Lowries, tangible evidence that it is helping with recruitment and retention and combating absenteeism. Staff feel it has eased the transition back to work after maternity leave. There are also three play schemes for the school holidays.
Ms Lowries says that gaining planning permission for the nursery was difficult because it is in a greenbelt area, even though it was providing help for key workers. The other battle is to keep childcare high up the agenda of NHS trusts, as it is not their core business.
While some NHS trust nurseries have opted for a banded system of fees, she says this is hard to budget and instead has chosen to charge by the hour and give parents more flexibility. A minimum session is five hours and hourly charges for children are 3.79 for under-twos and 3.40 for over-twos.
She has had requests from single parents for hours to be extended to 9pm, but feels that it may be more suitable in future to have a sitter service for children in their own homes provided by nursery staff.
