It was a painful irony: Pat MacAteer, head of Shepherd primary school in Rickmansworth, Hertfordshire, supported the local education authority's decision to create nursery places for all four-year-olds in the county. But it meant the 72 places at his very successful nursery would be cut, along with their funding, to give new nurseries and other schools their share of local children. A fine, purpose-built nursery behind the main school, only 10 years old, would lie half-empty; and the cut in funds meant redundancies would be inevitable.
But staff and governors put their heads together and came up with what seems like the perfect solution. Rickmansworth is home to the headquarters of several large companies with hundreds of employees, many of them women with young children. The school would use one of its spare classrooms as a nursery class for local children, and the purpose-built nursery would be opened on a paid-for basis as a daycare centre and nursery for children whose parents work locally but live away from the area. The Little Shepherd's Day Nursery, with fully qualified staff, is set to open in September for children from the age of six months to four years.
"It could have been doom and gloom, with redundancies and depression," says Mr MacAteer. "We had this beautiful building which we wanted to put to use. We didn't want to rent it out to a private company who would walk away with all the profits and over which we would have no control. So we decided to do it ourselves."
In January, companies in the area were sent a questionnaire to gauge interest. The response was immediate and positive; a meeting of personnel officers confirmed that the plan was a safe bet. The electrical retailer Comet is to donate Pounds 4,000 of equipment, and in return its staff, and those of other companies making a financial contribution, will get places at a reduced rate.
Steve Moss, a personnel manager at Nissan, which has also shown interest in the idea, says: "People travel quite far to come to work here. So there's a big advantage in having a nursery where you work rather than where you live. It means a parent can be here in five minutes if there's a problem, rather than having to drive 30 miles. And it's more convenient for picking them up at the end of the day."
From a company's point of view, being able to offer nursery facilities is becoming increasingly important. Figures quoted by the Daycare Trust show that women with children under five are entering the workforce faster than any other group, and demand for nursery places is rocketing.
But being able to help women continue their career after having a child is not only an attractive benefit for the employee. It can also be cost-effective for the company. Mr Moss reckons the cost of replacing a valued member of staff is usually in four figures, and the cost of training a new recruit can be even higher.
However, the idea of a state-funded primary school running a commercial nursery - and the Shepherd's project appears to be the first of its kind - seems fraught with problems. For a start, is it legal? Jim Dalton, head of educational planning at Hertfordshire County Council, which is fully behind the scheme, is in no doubt that it is.
The school is not allowed to charge for education, so the nursery was set up as a charitable trust run by some of the school's governors and representatives of local firms involved in the project. They will operate as an "arm's length" organisation separate from the main school. The county council has paid Pounds 8,000 for alterations to the building - to be paid back when the nursery starts to make a profit - and will offer advice and support.
It's no different, Mr Dalton says, from any other organisation, a playgroup for example, or a local club, hiring the premises. A legal agreement will set out the purposes for which the building may be used, and the school's governors will have ultimate control; the county council will retain ownership of the premises.
Fees will be set at commercial levels: Pounds 15 for a morning or afternoon session for children under two; and Pounds 13 for those over two, Pounds 28 for a whole day and up to Pounds 122 for a whole week. That means, if the places fill up as expected, that the nursery will make a healthy profit, and some of that will go back in to the main school.
Yvonne Ryan, chair of governors at the primary school, who will also be a governor at the new nursery, is undaunted by the prospect of helping to run a commercial operation. Payroll administration is being contracted out to the county council, as it is for the main school, and places are already being taken up. "We will be there to oversee the overall policies," she says. "There will be a lot of responsibility, but no more than for a school governor. "