· Features

On-site creche - Hold the baby

The tax benefits of workplace nurseries compare favourably with those for childcare vouchers and make them a cheaper alternative for working parents. So why do so few exist?

Affordable childcare in the UK seems further away than ever. According to childcare charity The Daycare Trust, in 2008 the typical cost of a full-time nursery place for a child under the age of two in England rose by more than the rate of inflation to hit an eye-watering £159 a week or £8,368 per year. In some parts of the country, particularly London and the South East, costs are even higher - £200 a week in the capital is not uncommon. In Scotland, the average weekly rate is £141 and in Wales, £142.

With take-up of government initiatives including tax credits, Sure Start schemes and childcare vouchers still depressingly low, one alternative - the on-site creche - appears to be a sensible alternative.

Under current rules, all childcare fees for registered workplace nurseries can be paid under a salary-sacrifice scheme - in other words, before tax and National Insurance Contributions (NIC) have been deducted - providing a huge benefit to employers and staff alike. This compares favourably with childcare voucher schemes, where only the first £55 that working parents put towards registered childcare costs each week escape tax and NIC. So if on-site childcare facilities are cheaper, why are there still so few of them?

According to the latest reward management study from the CIPD for 2008, just 6% of employers in the UK offer on-site childcare provision. "It's a nice perk if you can get it, but there are a number of hurdles both for employers and employees," says the CIPD's rewards specialist, Charles Cotton.

The largest barriers still seem to be finding the space required, as well as meeting Ofsted's rigorous health and safety standards. "As it's a very regulated area, involving specialist skills and expertise, increasingly even employers with large numbers of female staff, such as the NHS, are cutting down on it," says Purnima Tanuku, chief executive of the National Day Nurseries Association.

One solution for employers is to contract the benefit out to a supplier. Childcare provider Bright Horizons runs 120-plus workplace nurseries in the UK and Ireland for the likes of Pfizer and the MoD. Managing director (Europe) Stephen Kramer says outsourcing allows "companies to stick to their core competencies". However, with the employer expected to provide the physical space and pay for facilities and maintenance, the start-up costs can still be significant. So is this a price worth paying?

Saragh Barnett, HR officer, Kwik Fit Insurance Services, opened a nursery on site for under-fives in 2005. She says the expense is well worth it: "The facility has had a huge impact on retention and is also a perfect selling tool for recruiting." New parents are encouraged to visit it prior to maternity and paternity leave and are offered two weeks' free care on their return, while all employees also get four free emergency days' cover per year.

More importantly, perhaps, is research Bright Horizons itself carried out recently. It surveyed work-site childcare users and found that a whopping 91% of women said access to an on-site facility would be important in their decision to come back to work after maternity or adoption leave.

Having your employees' children in the workplace sounds like the perfect solution but some still have doubts. Louise Baker, commercial director at incentives and benefits provider Sodexho Pass, says: "On-site nurseries are fantastic if you can tick all the boxes on location, space and people's commuting problems. However, if you can't, then they can be exclusive, and what working parents really want is freedom of choice."

But for organisations that are serious about helping their staff with childcare, Tanuku offers advice: "First look at working parents' preferences and the spare capacity that already exists," she says. "It may be that the best solution is to block-buy spaces from an existing nursery local to work."


Software giant Microsoft, which has just won an Employer of the Future Award from championing group mother@work, set up its on-site nursery five years ago at its UK head office in Reading.

"We were fortunate as we were building new offices at the time and the site was quite large, so we were able to overcome one of the biggest hurdles, which is allocating space," says compensations and benefits manager Mary Giles.

Managed by childcare provider Bright Horizons the nursery is open from 7.30am until 6.30pm each day and has space for 52 children aged between three months and five years. "We tend to keep numbers down to 44 as this means we have back-up places for emergencies," says Giles. Parents are free to visit their child at any point during the working day, take them out for a walk, or spend time in the breast-feeding and play zones.

Microsoft audience marketing manager Claire Smyth, whose three-year-old attends the nursery four days a week, says: "For me it's a huge benefit as I know that my daughter Gianna is in a safe environment, two minutes' walk from my desk. I also can spend lunchtimes with her or go down for afternoon tea. She loves the environment. There is a 'Tots and Sports' class on a Wednesday, and French lessons on a Tuesday afternoon."

Giles says the firm has no hard data on the difference it makes for the 57 Microsoft families who currently use the nursery, or on absenteeism, retention rates, or return-to-work figures for mothers. But Smyth says: "I always knew I wanted to return to work and the fact that Microsoft offered the facility on site made it much easier."

The company also has a voucher scheme for staff at its London-based office and for those who opt for alternative childcare. However, demand is now so great that in June Microsoft bought a further 20 childcare places at another Bright Horizons nursery just across the road, that, under HMRC rules, will qualify as being 'on-site'.


The Office for National Statistics (ONS) has a nursery on its site in Newport for children aged from six weeks to five years. Although it is managed and operated by local provider Acorns Nurseries, the payment model here is slightly different. The government body provides the building and facilities, while parents fund the running costs.

Gemma Thomas, planning and programming manager at the ONS, has been using the nursery since June 2005, when she returned to work three days a week and her daughter was six months old. She says: "I don't have family close by who could assist with my childcare, so without this facility I would not be able to work. "Giving up work and being a stay-at-home mum was not financially viable so it was fantastic to have an on-site nursery. My husband also works at this office so it means we only require one car, which is a saving in itself.

"The nursery has a policy that allows a settling-in period," she adds, "and the first few weeks after I started back at work I would visit my daughter, Seren, in my lunch breaks. The nursery staff were all too aware of how parents feel leaving children for the first time, and I found their support invaluable. And knowing I was always close by if she ever needed me was a huge comfort."

The cost of the nursery is subsidised so they also save the Busy Bees vouchers, which helps, she adds.

Thomas will be working full-time from October this year which means her daughter will be in the nursery five days a week. "I would not be considering this if Seren did not enjoy her time there, but she loves it and she is learning all the time. This is balanced against lots of fun and playing," she says.

Thomas's career hasn't suffered from her maternity leave break. "Since returning to work I have been promoted," she adds, "which has helped out financially. It's good that as well as being a mum, I can still have a career too. It was difficult at first adapting to a new routine and leaving Seren with someone else, but I would not be without this facility now. It is the main reason I choose to work here."