The vacancy rate in nurseries in Greater London is lower than anywhere else in the UK and 'many have very long waiting lists', according to the recent draft childcare strategy produced by Mayor Ken Livingstone. 'In January 2002 the vacancy rate in London was 5.7 per cent, compared with 10.7 per cent in the UK as a whole,' it points out.
While providers have voiced concerns over possible over-provision in some areas in the UK as a result of the Government's conveyor belt of childcare initiatives, these figures suggest a scarcity of provision - and therefore potential rich pickings for nursery chains.
But the picture is more complicated than that. There are additional factors to contend with, such as the high cost of property, particularly in central London, and the problem of finding and retaining staff prepared to work in the capital for relatively modest wages against a backdrop of a cost of living which far outstrips the rest of the UK.
Susan Hay, chair of Bright Horizons Family Solutions in Europe, says that creating nursery provision in the capital presents its own particular challenges because of the twin need to cater for the needs of large numbers of people commuting into the centre and the opportunities thrown up by the vast scale of the city's commercial life.
When the now expanded group's Nurseryworks Family Solutions division was set up in 1990, Ms Hay says it concentrated 'on the childcare needs of working parents and the dynamics of how they get into London', taking into account the desire of many first-time parents to be near their babies during working hours and not a commuter ride away. Consequently the group's nurseries include some based in inner London, such as Waterloo, Fleet Street and Broadgate in the heart of the city and others at the other end of the commuter line at East Dulwich and Alperton.
But the common denominator among the group's nurseries is that they all have a degree of business sponsorship, ensuring that while the needs of individual parents are taken into account, the commercial viability of the nurseries is underpinned by links with local employers.
However, despite the overall picture of a shortfall in provision painted in the Mayor's report, occupancy levels can vary sharply within relatively small areas of the capital. The west London-based Buttercups chain has six nurseries with occupancy levels ranging from 60 to 65 per cent at Acton, while the Ealing and Chiswick nurseries are nearer 90 per cent, according to the chain's administrator Birol Kaya. 'But people prefer to stay on the waiting list in Ealing rather than travel the short distance to Acton,' he adds.
Because of the nature of the nursery business, especially with the growth of flexible working, Mr Kaya says 'it is not possible to have 100 per cent occupancy. To find all the children to fit in all the slots is very difficult and impractical. If you have 93 per cent you can really call it 100 per cent.'
At the five-site Eaton Square Schools, which are located amid the affluence of Belgravia in the heart of London, joint head of nursery schools Vivien Adams says that 'it is very rare for supply to outstrip demand. We have long waiting lists, although they can seem inflated because some parents put their child's name down for more than one provider.'
But the tense global political situation could have an impact here. 'A lot of our catchment is from business people on secondment, with fees paid by companies. In this political climate a lot of people are being posted home and companies are less keen to splash out the money, so I don't know how that will affect us in the future.'
With four members of staff set to leave this summer, Ms Adams acknowledges that recruitment is 'a struggle sometimes', which is cushioned to some degree by the company's ability to hire staff from overseas, particularly Australia, New Zealand, Japan and Russia.
Mr Kaya says that after Buttercups sought, largely in vain, for qualified staff through advertising in Northern Ireland and the north of England, it is now planning to cast its net wider by getting in touch with embassies, including countries in the Far East to try to lure staff to nursery jobs in this country.
The company also experimented by acquiring a house near its nurseries to accommodate staff at a reasonable rent. But Mr Kaya says the initiative has been 'scrapped because nursery staff did not find it attractive'.
Tracey Storey, head of personnel and training at Leapfrog, which has three nurseries in central London and a couple on the outskirts, believes the problem of recruitment stems largely from the longer-term reduction in the numbers of qualified staff coming out of colleges. As a result the chain has shifted to recruiting unqualified staff and then training them within the company.
The competition for staff did lead to a 'salary war' where chains would recruit and train staff, only for them to be poached by other chains offering marginally better benefits packages. But Ms Storey says that the tit-for-tat process of exchanging staff is 'now hopefully a thing of the past'.
The high costs of living and travelling in London compared with other parts of the country are reflected in the way many chains set their salary scales. Asquith Court, with around 10 nurseries in inner London and several more on the fringes, introduced four salary scales nationwide two years ago.
Personnel manager Sue Metselaar insists that recruitment problems exist in places like Southampton and the north west and are due to the nature of the sector rather than geographical location. She says that while the company does not pay London weighting, an equivalent amount is contained in London salary levels.
Leapfrog does pay London weighting and has five salary bands linked to fee levels, ranging from A in the Midlands where a newly qualified nursery nurse gets 9,500 and fees are around 120 a week, to band E in London where the starting salary is between 12,500 and 13,000 and fees can be up to 250 a week. Ms Storey reckons the London weighting element produces an uplift in salary of between 25 and 35 per cent, with central London 10 per cent higher than the outer reaches of the capital.
At Buttercups pay is now related to staff performance, and Mr Kaya says this has led to 'a healthy dialogue in which no one feels penalised. They have a proper appraisal which makes staff more aware of their responsibilities'.
Heather Gibson, human resources director at Jigsaw, with just two of its 36 nurseries in London, says that staff being lured into more financially lucrative posts as nannies exacerbates recruitment and retention problems.
She also identifies the growing tendency for staff to want to work school hours as another pressure.
Krish Brown, co-owner of the five-nursery Mother Goose chain in south-east London, undertook a review of salaries and benefits last year, which resulted in pay increases and extra holidays. This August the company is offering staff subsidised holidays at an apartment it has acquired in southern Spain and it is also closing down the nursery for two weeks to ensure staff get a decent break.
Ms Brown says, 'We are doing these things for retention purposes. We're a thriving company and we thought this would be a good way for our staff to benefit. Parents will have to pay fees for those two weeks, but we think it's important to keep our staff happy. We've got negligible staff turnover at the moment which is wonderful.'
She says that the company charges 640 a month for children between nought and two and 528 for over-twos. 'That's well below what the big players charge, but unlike them we do not have large purpose-built buildings,' she says.
Academy Childcare now has just one nursery in London, at Maida Vale, after the recent closure of its facility in Victoria. Managing director Paul Richards identifies high establishment costs as a key burden in the capital. 'In central London there is a shortage of appropriate property and you are competing with other potentially more lucrative uses, not just residential but also business and entertainment. We have a pipeline of sites under consideration, including some in London, and we would not exclude them on grounds of cost,' he adds.
Building costs, coupled with the problems of recruiting and retaining staff and with the estimated cost of a day nursery place in inner London at 8,700 a year - 30 per cent higher than the England average - mean that growing nursery businesses to meet demand in the capital will require all the determination and imagination, as well as hard-edged business acumen, that chains can muster.