Nursery Staffing Costs: The Ones You Can Avoid

In many nursery groups, agency spend sits in the budget like a utility bill. It is planned for, accepted and rarely questioned.

But the extra cost of covering gaps is not a fixed price. Instead, part of your nursery staffing costs comes from how cover is organised. There is a different way to do it, in five steps.

This post walks through that new approach to avoidable nursery staffing costs, from the quickest fix to the most structural. Each step removes cost before the next one is needed. For each, you will see where the money goes and what to do instead.

Why nursery staffing costs feel unavoidable

Picture a manager at 7am. A practitioner is off sick, so the ratio will not hold. The quickest fix is a call to an agency.

That call carries three built-in costs. First, the manager has no time to compare. Second, the group has no leverage on the rate. Third, the invoice carries VAT on the full amount, including the worker’s pay.

When you repeat that across every nursery, every week, the bill starts to look like a law of nature.

But it is not a law of nature. The problem is the order of the decisions. Agency is the first call. Instead, it should be the last. So the new approach reverses the order.

Step 1: Cut nursery staffing costs with your own team

Many gaps are not real shortages. Instead, they are mismatches. One room is short while another has a spare practitioner. Or the headcount works, but the qualifications do not.

The EYFS statutory framework applies ratios to the total staff available across the whole provision (paragraph 3.47). For two-year-olds, you need at least one member of staff for every five children. At least one must hold an approved Level 3 qualification. At least half of the other staff must hold Level 2 (paragraph 3.49).

So 20 two-year-olds need at least four staff. But the mix of qualifications matters as much as the number.

Then you fix the gaps with drag and drop. Move a qualified practitioner from a quieter room to a short one. Then check the ratio again.

Every gap you close with your own team is an agency shift you do not buy. It is the cheapest saving, because the staff are already on your payroll. You still need safe supervision in every room. The tool shows the numbers, but your managers make the call.

Step 2: Fill what is left with your own bank

Some gaps cannot be closed from inside the nursery. Next, turn to your own bank. It is the second lever on nursery staffing costs.

BStaff is Kalendit’s platform for nursery group bank staff. Your bank is your own pool. Your staff see only your shifts, so it is never an open marketplace.

One screen shows who is short and who is free across your nurseries. You manage profiles, rates, bookings and fill rates in the same place. Timesheets are created automatically.

These are people your managers know. Because they already know your routines, nobody has to explain the nursery from scratch at 7am. And no booking fee applies when your own bank staff cover a shift (Kalendit FAQ).

For the standard behind your bank, read our post on running one standard across every nursery.

Step 3: Set your own rate for supply cover

Some gaps will remain. This is where most groups call an agency. However, there is another option.

Kalendit educators are vetted supply staff. You post a shift and set the hourly rate. Educators see the rate before they accept. There is no contract, so you pay as you go.

That is the third lever on nursery staffing costs. With an agency, you accept the rate it quotes. A manager with a gap at 7am has little room to negotiate. With Kalendit educators, you choose the rate.

The fee is clear too. Kalendit charges 23% plus VAT as standard, paid by the nursery. It also falls to 20% at higher volumes (Kalendit FAQ).

Step 4: Stop paying VAT on the educator’s pay

Now look at the invoice. VAT is a hidden part of nursery staffing costs. When an agency supplies staff as a principal, VAT is due on the full amount. That includes the worker’s pay (HMRC VAT Notice 700/34, paragraph 2.3).

Most nurseries cannot reclaim that VAT. Childcare provided by a regulated nursery is exempt from VAT (VAT Notice 701/2, section 2.2.1). VAT on costs linked to exempt supplies is generally irrecoverable. So it stays in your costs.

Kalendit educators are self-employed. So VAT applies to Kalendit’s fee only, not to the educator’s pay.

Here is what that means on one 8-hour shift at £20 an hour. Both routes cost £196.80 before VAT. Only the VAT differs.

Over 100 shifts, that is £3,200 in VAT you no longer pay.

Step 5: Cut your hiring bill by hiring people you know

The last lever on nursery staffing costs is the one most groups never count: the cost of hiring.

The Department for Education’s 2025 provider survey shows staff turnover of 16% in private group-based providers and 12% in voluntary ones. If a group has 500 paid staff, 16% means about 80 people leaving in a year. Each one then has to be replaced.

Every replacement costs money. Adverts. Placement fees. Manager time. Induction. Weeks of thinner cover. And if the hire leaves after a few months, you pay it all again.

Now take another route. Once a Kalendit educator has worked your shifts for weeks or months, they are already tested. You already know how they work with children. Likewise, they know how your nursery runs.

When you offer them a role, both sides decide with real information. That lowers the risk of someone leaving a few months after they start. It also shortens hiring, because you skip most of the search.

The price is clear up front. When you take a Kalendit educator into a permanent role, Kalendit charges a standard discovery fee.

Now compare. Add up your own cost per hire, including adverts, placement fees and manager time. Then count how many hires you make in a year.

Put a number on your own nursery staffing costs

However, your figures will differ from the examples above. The only way to know your real nursery staffing costs is to use your own numbers.

Use our cost calculator to put your own numbers on it. Enter your number of nurseries, your agency hours and rate, and the rate you would pay an educator on Kalendit. Then see what you could save on nursery staffing costs each year. All figures exclude VAT, so the real saving can be higher for nurseries that cannot reclaim it.

Want the wider picture? Read what Ofsted’s updated toolkit looks for in the room and the staffing test groups face this autumn.

Frequently asked questions

Why is agency cover so expensive for nurseries?

An agency invoice bundles three things: the worker’s pay, the agency’s margin and VAT. When an agency supplies staff as a principal, VAT is due on the full amount, including the worker’s pay (HMRC VAT Notice 700/34, paragraph 2.3). At short notice, a nursery also has little power to negotiate the rate.

Can nurseries reclaim VAT on agency staff?

Most cannot. Childcare provided by a regulated nursery is exempt from VAT (HMRC VAT Notice 701/2, section 2.2.1), and VAT on costs linked to exempt supplies is generally irrecoverable. Your position depends on your own VAT status, so check it with your accountant.

How can a nursery group cut nursery staffing costs?

Work through five steps in order. First, redeploy your own staff using a rota tool that checks ratios and qualifications. Second, fill gaps from your own bank. Third, use supply educators at a rate you set. Fourth, avoid VAT on the educator’s pay. Fifth, cut hiring costs by recruiting educators you already know.

How much does Kalendit charge compared with an agency?

Kalendit charges a platform fee of 23% plus VAT as standard, paid by the nursery, falling to 20% at higher volumes. You set the hourly rate for each shift, and educators see it before they accept. No booking fee applies when your own bank staff cover a shift. Kalendit estimates typical agency markup at 40 to 60% on top of the educator’s pay.

What is the staff turnover rate in nurseries?

In the Department for Education’s 2025 childcare and early years provider survey, staff turnover was 16% in private group-based providers and 12% in voluntary group-based providers. It was 8% in nursery class childcare settings.