'Just relax the ratios, turn on the tap and the children will come'

In recent months, not for the first time, I have been in a minority: arguing that that there is nothing magic about the precise staffing ratios we have at the moment.

While more staff are always better than fewer, I believe we should be prepared to consider new ideas if they can help to square the circle of high fees, low wages and low profit margins.
 
But do Liz Truss's proposals meet this test?  The DfE accountant who produced the recent 'scenario modelling' exercise for her has done an excellent job on paper. Simply by changing the ratios, a 'stylised' (aka 'fantasy') nursery can transform itself from 48 to 73 places, generating £200,000 of extra income which can be used to boost staff salaries by an average of £3,000 a year and give parents a 13 per cent fee reduction into the bargain.

Let's look at this 'stylised' nursery a bit more closely.

First, it must already have room for 73 children, since it can apparently absorb the increase without any additional investment.   But as it only has 48 now, it is operating at just under 60 per cent capacity.   There is nothing unusual about that - except that this nursery can increase occupancy to 100% merely because the government changes the ratios.

It lives, therefore, in a world where children are an unlimited commodity.  Just relax the ratios, turn on the tap and the children will come - not two by two, as in the Ark,  but four by four for babies and six by six for toddlers, with pre-schoolers marching in through the gates in groups of 13.

Secondly, it already has the 'dream balance' where the number of children in each age group exactly mirrors the existing staffing ratios:  eight pre-school children for every four toddlers and three babies.  And it can maintain this state after the change by filling the nursery with pre-schoolers - the very group which is hardest to recruit because children are going into the school system ever younger.

And thirdly, it has degree awarding powers. How else are we to account for the fact that its only additional costs in moving to a 1:13 ratio come from increasing the salaries of two individuals from 'supervisory' to 'graduate' status?   Or does the model assume that, for every graduate who is employed, a qualified non-graduate will be made redundant without any cost?

It's all a matter of style. The tables below present two 'stylised' nurseries.  Each has 73 places and an occupancy rate of 60 per cent and charges £4 per hour.  Each pays its staff the national average rate.  The DfE nursery (appropriately rose tinted) has children in just the right ratios and an unlimited supply of children of all ages waiting to enrol.  The second has a slightly less convenient balance of ages, isn't able to trade in its staff for graduates and has to work a bit harder to recruit new children.   Spot the difference.

 

Additional revenue £203,000

Salary and other cost increases -£127,000

Additional profit for reducing fees £76,000

Additional revenue £0

Redundancy savings £30,000

Additional profit for reducing fees £30,000

Or, of course, the second nursery could reinvest the redundancy savings in a couple of graduates, boosting the pre-school room ratio to 13 and allowing it to get rid of another member of staff.
So there you have it. Most nurseries, as is now clear, will not be rushing to adopt the new ratios.  Even for those that do, the decision will not be about how to reinvest all that new revenue.  It will be about whether to reduce fees or jobs.

Unless, of course, Liz Truss can persuade the Treasury to adopt a novel form of quantitative easing.  Print more children.

Ross is a director of PBD, the e-portfolio training company delivering the new early years Level 5, and of Blois Meadow Day Nursery, which has just received an outstanding Ofsted grade.

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