Affordable childcare challenges in London

June O'Sullivan MBE


This week I had two separate conversations with thoughtful, sensible women who were bewildered as to why childcare remains so expensive in London. I sighed, took a deep intake of breath and began to explain to them the complex world of childcare.

I began by establishing the context that childcare is now part of the city’s infrastructure enabling parents to work, children to learn and thrive and families to be part of local community connections. As a social enterprise, London Early Years Foundation (LEYF) operate a business with a social purpose. This means we try and subsidise as many children from poor and disadvantaged families as is possible, employ and train apprentices and operate in areas of deprivation. However, like any childcare business, our main costs are staff, but as a social business we pay the London Living Wage to qualified staff, provide a generous pension, decent holiday and sick leave and regular training and development opportunities.

Our next big costs are rent and rates, which are high even in the most deprived parts of the city. The rest includes the costs of food, toys, resources, professional costs and all that silent expenditure that is needed to run a business.

To keep afloat, we need parents and the Government to pay the right fees which cover our costs. This reveals our first problem which is that the Government pays on average half the cost of the funded 15 hours. This is sorely felt in an expensive city where childcare costs are generally 23 per cent higher than the rest of England and where 700,000 children live below the poverty line, 37% of all London’s children compared to 26% across the UK. So, while LEYF subsidises nearly 43% of those funded places across all its Ofsted-rated good and outstanding nurseries what is beginning to happen elsewhere is an emerging two-tier service with separate provision for those children on the ‘free’ offer.


This problem is compounded by a second and intensifying challenge of recruiting staff. Given that childcare is part of London’s infrastructure we need to ensure we have staff to run it. Staff struggle to live in the city where housing costs are around 50 per cent higher than the rest of the UK, where rents have increased 24% and transport costs are overwhelming. Unless we find ways to provide affordable housing so they can live and work in a city, we risk alienating parents who want to work. London parents have nowhere else to turn in a city where less than 20% of working families have no extended families.

This has not been unnoticed by our Mayor, Sadiq Khan who put childcare and keyworker housing on his manifesto. He has followed up on this by appointing and first Deputy Mayor for Education and Childcare, Joanne McCartney. She will join us for a lively discussion and debate on 10th November, 17.30 at the BT Centre, 81 Newgate Street (closest tube, St Pauls). If you want to come along, please click here.

*June O’Sullivan MBE is CEO of the London Early Years Foundation, a social enterprise which currently runs 38 nurseries across 11 London boroughs.

Comments [1]

  • Stuart Blunden says:

    PVI Childcare providers have to pay VAT on all purchases, other businesses very often do not have to do this. Within the same sector maintained childcare provision provided by the local authority, currently funded at much greater levels than PVI do not pay VAT on any of their purchases.

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