Lesson from nursery: the private sector can help

BY THE end of the last century, Edinburgh had grown into the second city of the United Kingdom in terms of wealth and income. Along with its economic progress came social changes, great and small.

A small one was that, in households of two professional parents, the children were put, as soon as possible, into nurseries (or the pre-school sector, as we must say nowadays) while the couple continued to earn pots of money. Parents saw their infants for 30 minutes in the morning and a couple of hours at night, and that was what young family life consisted in.

This pattern of existence could not have emerged unless the demand it represented had been matched by a supply, as any free marketeer would expect.

Many nurseries were opened by respectable middle-aged women, often with past teaching experience but not wishing to return to the grind of the schools after bringing up their own children. Still, the capital's douce ladies were not to be underestimated: with the rise of the two-income household, they saw their opportunity and moved in to seize it.

So the huge expansion of pre-school education that began 20 years or so ago took place in the private sector, and for a while that was where it stayed.

By definition, it had to be self-financing. I am told that the top-of-the-range private nurseries might charge up to 15 an hour, but to a professional couple this meant no more than the cost of the bottle of wine they drank over dinner. Obviously the pre-school sector was making profits, or else it would not have grown as fast as it did in the 1990s. It met a need. Its effect was beneficial.

In modern Scotland this was not, however, enough. The nurseries were hardly egalitarian: poor families could never afford 15 an hour. And I suspect that, in places like the Scottish Education Department, the emergence of an entire new sector unforeseen, unplanned and uncontrolled by the very officials who are appointed, empowered and paid to foresee, plan and control was a stench in the nostrils.

A couple of other factors started to build up a case against private nurseries. There was research showing that children who got pre-school education then did better at school, implying it should benefit not only those who could afford it.

There were the first stirrings of concern about what has today become the obsession with child abuse, amid suggestions that somehow it was more likely in the private than in the public sector. All this tended one way, towards universal availability of pre-school places under regulation by the state. That has been official policy in Scotland since 2002.

Yet even in the boom times of public spending, there was no chance of the state providing all the places itself, in the same manner as it does in primary schools. The private pre-school sector had, though kicking and screaming, to be brought into the state's embrace. A system of inspection was set up. Then for 12 hours and 30 minutes of the week the places at private nurseries were made free to the children using them, the cost being handed over directly to the nursery by the local authority. The average fee paid hovers round 3 an hour.

In other words, a huge gap was set between the price determined by the public sector and the fee of up to 15 an hour on which the private sector had settled.

Here is the difference between the market and the state. Presumably the state believed, in deciding on such a low figure, that private pre-school customers had been exploited.

However that may have been, nurseries faced a yawning financial gap they had to bridge. Some never tried, but went out of business. Others, by hook or by crook, found ways of topping up the basic money so as to bring it nearer the economic cost of the service, mainly by direct charges to customers for various extras. But now, apparently, moves are afoot to close these loopholes.

At the official level, malice towards the private sector may well be at work here, but I would still absolve the government of Scotland as such. In this area of policy, as in many others, the SNP took power at Holyrood brimming with good intentions. One of them concerned pre-school education: to raise the number of weeks during which free places are available from 35 to 38 a year. This might look like a good idea till you think it through.

Is the government offering more money? Don't laugh. Of course the cost will be borne by the nurseries, and more will close down.

Promises, promises have dogged Alex Salmond's team for the past three years, and will continue to do so. But I have gone through this particular subject in detail because it seems to me such a lost opportunity. There had been a genuine chance of a pre-school system harnessing the enthusiasm, energy and resources of a successful private sector to the novel aim of universal availability desired by the government. Instead, the public sector has stomped in hob-nailed boots all over a host of benevolent and competent providers, with results that must be less than optimal, and remain so.

There was a time in the Victorian era when Scots with lots of money, the most famous being Andrew Carnegie, sincerely sought to do good with it. In that purpose he found every encouragement, not least from the gratitude of society at large for his philanthropy.

Though private interests and public interests might have diverged in those days too, even so each side relied on the good faith of the other – and most often justifiably. Today that fruitful relationship has broken down. On the public side the suspicion of private motives and on the private side the contempt for political manipulation are bottomless.

The pre-school sector is only a small one, but there are much bigger ones, the health service and, indeed, education altogether, where the absolutism of the Scottish state still reigns supreme. I am glad to see that the new secretary of education, Mike Russell, has announced open season on old shibboleths and has declared his own mind open to fresh ideas: Scottish schools and universities are far from being the best in the world today and, since the public purse is empty, only private money can make a difference to them.

But he has colleagues – I need not name them – for whom the private sector remains an enemy. That attitude pervades the apparatus of the state in general and it can only do the country harm.