How Our Partnership with London Business School’s LondonLAB Aims to Address the Childcare Crisis in London

London is in crisis. The city, renowned for its economic dynamism, cultural diversity, and status as a global financial hub, is grappling with an exodus of working families. Recent reports indicate that by 2028, London is set to lose 52,000 primary school places due to declining enrolment, a clear sign that families are moving out of the capital. The driving factor? The skyrocketing cost of living, with childcare standing as one of the most significant financial burdens for working parents.

At Hatching Dragons, we have long recognised the pressures that families face in balancing their careers with raising children. This is why we are excited to announce our partnership with the London Business School’s LondonLAB Masters in Management Consulting programme, through which some of the brightest business minds will be working with us to develop the commercial case for a revolutionary solution: the Workplace Nursery Scheme.

The High Cost of Childcare: A Barrier to London’s Future

London’s cost of living has reached unprecedented levels, forcing many families to make difficult decisions. Housing, transport, and utilities already consume a significant portion of household income, but for families with young children, childcare can be the breaking point. Full-time nursery care in central London can cost upwards of £20,000 per year per child—an amount that many families simply cannot afford.

The result? Many highly skilled professionals, particularly women, are forced to exit the workforce or move to areas where the cost of living is lower. Employers, in turn, face a brain drain as experienced staff leave the city. If this trend continues unchecked, businesses will struggle to retain top talent, and London’s reputation as a thriving economic centre will be at risk.

The Workplace Nursery Scheme: A Game-Changer for Employers and Families

One of the most overlooked yet powerful solutions to this problem lies in employer-sponsored childcare. The Workplace Nursery Scheme is an existing government-backed initiative that allows employers to pay childcare fees from the pre-tax income of their employees. This means that employers can help reduce the financial burden on working parents while benefiting from significant tax savings themselves.

However, most businesses are unaware of the full extent of what they can do. While many believe they are limited to token contributions, our research suggests that there is no upper limit on what employers can invest in workplace nurseries and deduct those contributions from their corporation tax liabilities at the end of the year. By fully covering the cost of childcare, businesses can transform the landscape for working families, boosting workforce participation, retention, and productivity - a staff benefit that both pays for itself and delivers material financial upside to their employees

The Role of London Business School’s LondonLAB

Through our partnership with London Business School’s LondonLAB, two teams of Masters in Management students will work to refine and validate the business case for corporate-sponsored childcare. Their research will focus on:

• Clarifying the tax landscape to highlight the full extent of corporation tax-deductible contributions available for workplace nursery schemes.

• Developing financial models that demonstrate the return on investment for businesses that adopt this scheme.

• Identifying key industry sectors and employers that stand to gain the most from implementing workplace nurseries.

• Creating a market map to engage potential corporate partners and landlords in integrating childcare into commercial real estate strategies.

This collaboration will result in a business plan and an activation strategy that will enable Hatching Dragons to present a compelling case to employers, investors, and policymakers alike.

The Benefits: A Win-Win for Businesses, Families, and Society

By encouraging companies to take an active role in childcare provision, we are not just addressing a financial issue; we are tackling some of the most pressing social and economic challenges of our time. The dividends of employer-sponsored childcare extend far beyond the immediate financial relief for parents:

• Workforce Productivity: Parents who have access to reliable and affordable childcare are more engaged and less likely to take unplanned leave.

• Talent Retention: Businesses that support working parents create a more inclusive work environment, helping to retain experienced professionals.

• Economic Growth: A larger workforce means greater economic output, higher tax revenues, and a more dynamic economy.

• Demographic Growth: With the UK’s birth rate declining, supporting families financially can encourage population stability.

• Gender Equality: The burden of childcare disproportionately falls on women. A robust childcare support system enables more women to return to work, fostering greater gender balance in leadership roles.

Why Employers Should Act Now

The reality is that London has an abundance of underutilised commercial space, and employers can repurpose it to provide high-quality early years education for their teams’ children. With corporation tax relief available, there is little reason for businesses not to embrace the Workplace Nursery Scheme.

The post-pandemic shift in working culture has already reshaped how businesses think about office spaces and employee wellbeing. This is the next logical step. It’s time for London’s employers to recognize that by investing in childcare, they are investing in the future of their workforce and the city itself.

What’s Next?

Over the coming months, our collaboration with London Business School will yield concrete strategies that businesses can implement to make childcare a fundamental part of their employee benefits. We will be engaging with corporate leaders, policymakers, and commercial landlords to ensure that this initiative gains the traction it deserves.

If you are a business owner, HR leader, or policymaker interested in learning more about how the Workplace Nursery Scheme can work for you, we encourage you to get in touch. Together, we can reshape London’s childcare landscape, retain top talent, and make the capital a more family-friendly city once again.

Stay tuned for updates from our collaboration with London Business School’s LondonLAB. The future of childcare in London is about to change for the better.