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Alliance dismantles government’s £40 a week saving claim ahead of launch of early years ratios consultation

The government has claimed that changing the maximum number of two-year-olds per adult in nurseries and pre-schools in England from four to five could result in savings of 15% or £40 per week for parents of two-year-olds.

This is based on the following calculation:

Staff costs account for 74% of overall costs in early years settings. Moving from a ratio for 1:4 to 1:5 for two-year-olds would cut staff costs by 20%. 20% x 74% = 15%. The average weekly cost of early years places is £265 and 15% of £265 is £40; therefore parents could save £40 per week.

The calculation operates on the basis that all nurseries and pre-schools are currently working to a 1:4 ratio at all times, that they will all move to a 1:5 ratios at all times and that the entirety of any savings made would be passed onto parents in the form of lower fees. This is fundamentally flawed for a number of reasons:

A recent Early Years Alliance survey of over 9,000 early years settings found that only 51% of providers delivering places to two-year-olds work to maximum ratios all the time, meaning that around half already have scope to work to more relaxed ratios more often than they currently do, but choose not to.
The same survey found that only 5% of nurseries and pre-schools would always/permanently operate to looser ratios if the government’s proposal went ahead.
Overall, the survey found that only 2% of nurseries and pre-schools believe that parental fees at their setting would lower as a result of changes to ratio rules.

For the government’s calculation to work, settings would have to only increase their child numbers in ‘ratio-sized amounts’ to move from a 1:4 to a 1:5 ratios. So, for example, if a setting had 5 members of staff and 20 children, they would have to take on 5 additional two-year-olds at once to move to a full 1:5 ratio. If they only e.g. took on 2 extra children (so 22 in total), this would be a ratio of 1:4.4, not 1:5.

The calculations incorrectly assume that all settings have the physical space to be able to substantially increase the number of children they care for and educate, within the current legal limits on floor space per child, which the government has not indicated they are consulting on.

Children and families minister Will Quince has himself argued that there is no expectation that settings will move to a 1:5 ratio all the time and that the change is unlikely to impact largely on costs. In an interview with Sky News, he said: “The ratios change in and of itself is no silver bullet or panacea or magic bullet… it is not going to significantly change costs because what we don’t expect is setting to routinely or religiously go to 1:5. Most doing currently go to 1:4."

About the Alliance

The Early Years Alliance is the largest and most representative early years membership organisation in England. A registered educational charity, it also provides high-quality affordable childcare and education to support children and families in areas of deprivation throughout the country.
The Alliance represents 14,000 members and supports them to deliver care and learning to more than 800,000 families every year. We deliver family learning projects, offer information and advice, produce specialist publications, run acclaimed training programmes and campaign to influence early years policy and practice.
The Alliance website is www.eyalliance.org.uk