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Inflated fees for a child receiving 15 hours of "free" entitlement

(101 Posts)
moniuhna Tue 26-Jan-16 15:12:58

My son will soon be eligible for the government funding for 3-4-year-olds and the nursery he goes to takes part in the scheme. When I look at their fees I've discovered that even though they say he will receive the "free" hours (12 in any week as he is in the nursery only for two days), they inflate his hourly rates from £5.8 (paid by non-funded children) to £7.50 for any other hour above that so in fact we end up feeling they top-up his "free" hours by doing that. They claim that they do not operate on hourly basis but I calculate that if their daily fee is £58 for 10 hours of childcare then it comes to £5.8/hour but they don't accept this and say I can't calculate it this way. They say they only charge monthly and that the fee reflects the needs of the business. And in fact they can't tell me why I am charged more than I should as "businesses do not need to tell why they operate in the way they operate". Is this a common practice? Do I stand any chance challenging that or is there a loophole allowing them to do so?

Buttercup27 Tue 26-Jan-16 15:18:46

What the government pay the nursery for the funded hours is much less than the going rate. Unfortunately if they didn't top up the fees they would be losing money which as it is a business is not good.
Technically they are not allowed to charge top up fees, but most adjust it's fees to take the liss into account.

ABetaDad1 Tue 26-Jan-16 15:22:39

Some 10 years ago when DS2 was in nursery they would not take part time children and prioritised anyone who sent children 5 days a week.

The overhead (fixed cost) of the business is the same regardless of whether your child is there or not - hence they charge less for full time children as they spread the fixed cost over more hours for those children. The part time children pay more per hour.

moniuhna Tue 26-Jan-16 15:43:43

ABetaDad1, in my son's nursery the daily fee is the same for every child regardless of the number of days they attend. So if a child goes 2 days a week the daily rate is double, three day triple etc. This has no relevance in this case. What I question is the inflated hourly rate I pay for my child's hours over and above his "free" entitlement. So if a child is not in receipt of funding (for example the months before they become eligible) they are charged £5.9 per hour, when in receipt of funding they are charged £7.50 per hour. Clearly this is not right?

BaronessEllaSaturday Tue 26-Jan-16 15:49:14

You say they don't have an hourly rate so how do you get the rate of £7.50 an hour is it by calculating the rate from what they charge for separate sessions.

My local nursery does 5 sessions a day to cover a morning and afternoon free session, if you pay for a full day you pay £x however if you are not paying for all 5 sessions you have to pay the rate for the individual sessions which does work out at a higher hourly rate.

Akire Tue 26-Jan-16 15:55:00

The nursery lose money for any free hours so if they decide they need to charge 3-4y more per hour to make up for it. So yes you are topping up some of his funded hours but you are still better off than before. You do of course have s choice to move to a school nursery who may just offer mornings or Pms term time only.
There isn't really a lot the nursery can do as they probable get half the going rate they charge per hour in the free sessions. If they couldn't top it up they would have to close

Quodlibet Tue 26-Jan-16 15:55:55

Is the nursery place full time across the year or just term-time?
That also makes a difference, as they may spread his 'free' hours which are only for 38 weeks a year across 50 weeks if that's how many weeks he goes.

What do you mean he only gets 12 hrs as there 2 days? Surely the free 15 hrs should be 15 hrs regardless of whether he takes them over 2 days or 5?

moniuhna Tue 26-Jan-16 15:56:20

At the moment we pay £58.53 daily rate for 10 hours of care (so say £5.9/hour). My son goes to the nursery two days a week. From April we will pay wrap around care of £365 per month and I was told he would be eligible for 12 hours of free entitlement as they only allow two 3-hour sessions in any day.

I calculated that if my son is in the nursery for 10 hours a day and gets 6 of them "free", we would have to pay just for the outstanding 4 hours a day for 38 weeks (8x£5.9x38) and the remaining 14 weeks not covered by funding 20x£5.9.

(5.9x8x38)+(14x20x5.9) = 3417/12 = 284/month

This is, however, not the case as the nursery charges us £365 per month and they do not say where the figure comes from. When I divide £365 by the total number of hours my son would attend per year this comes into £7.50 per hour.

This is very unfair, in my opinion, but the nursery does not want to explain this and refuse to give me the breakdown of the £365 claiming that they do not have to tell me how the nursery operates. Is this right?

LottieDoubtie Tue 26-Jan-16 16:02:24

I would guess that yes, they don't have to tell you! It's not the best business strategy from them, but if nursery places are in sufficiently short supply I suppose they can get away with it!

I have heard of this kind of thing from nurseries before - anecdotally it happens all the time. The reason being the govt refuse to pay the going rate for the childcare which does put nurseries in an awkward position. The right answer clearly isn't penalising the parent but the nursery may feel it has no choice.

Goodness only knows what will happen when the 30 hours entitlement comes in....

Akire Tue 26-Jan-16 16:07:11

Problem is day charge 10h is £59 to nursery.
2x3 funded let's say get £3 h from government so (6x3) £18 plus 4h at new charge of £7.50 =30

So previous 10h earned nursery £59
Mix of free hours and higher rate earns nursery £48

So they still lose out by £11 a day. It will depend on how much each area gets but it is pretty low from what I imagine. If you paid £5,90 for extra 4h day they would get 18+23.60=41.60 so losing £11.70 a day.

The fact outside school holidays they go back to normal rates seems to be really trying to keep it fair. They still have same wages and outgoings to pay.

BaronessEllaSaturday Tue 26-Jan-16 16:07:29

I think they should give you the breakdown but it is normal for nurseries to charge a much higher rate when you are not paying for the full day. To give an example if I calculated the hourly rate for my local nursery for doing a full day it comes to less than £3 an hour but if you are only paying for a session or more it works out at £5 an hour. They are open about their fees however which it sounds like yours are not.

ILostItInTheEarlyNineties Tue 26-Jan-16 16:13:48

Unfortunately I've never come across a nursery/preschool that doesn't charge top up fees after the child is three. It seems to be how they operate. I tried to contest it with the staff and got nowhere. It's not fair but seems quite commonplace.

Akire Tue 26-Jan-16 16:14:14

Excuse maths ...
Should read if charged you old rates with free hours would cost
6x3 plus 5.90x4 cost the nursery £17.50 in missed fees

BreakingDad77 Tue 26-Jan-16 16:18:23

moniuhna

From what I have read since about the 90's childcare in the UK has rocketed compared to eurozone I think is now about double the EU average.

I don't think we have unpicked how much of this is due to say bureaucracy and leader/child ratios and or greed.

Akire Tue 26-Jan-16 16:20:30

It's only going to get worse With new living wage increases plus all new pension schemes that have to be paid for. It's very same in care work great idea but hasn't been budget in education or social care costs on the ground

George2014 Tue 26-Jan-16 16:24:49

What a minefield! Ds now 5 went to 2 nurseries when he was of free hours age as we moved and both were the same.

He went 3 days a week and we were charged a daily rate for 10 hrs, so the bill was for 30 hrs childcare a week. When the 15 free hours were applied, the bill was simply cut in half (but only in term time).

moniuhna Tue 26-Jan-16 16:27:05

In fact it is £3.74 for my area. Yes, it is less than £5.90 but also it covers only basic care and learning, not food, drinks etc. The government did not pull this £3.74 from a hat, they did their calculations too, didn't they? I do realise business is business and it needs to profit but £7.50 per hour??? Really? People don't even earn that much per hour from their daily jobs...

littleducks Tue 26-Jan-16 16:34:16

The government did their own calculations but don't care if it doesn't cover costs.

moniuhna Tue 26-Jan-16 16:51:12

Is there any regulation which says that funded children cannot be charged more per hour than children not receiving the funding (in the same setting)?

HeadDreamer Tue 26-Jan-16 16:56:11

All the good nurseries here do that. You can always go somewhere else if you want to. Vote with your feet.

If enough people complain, they'll just withdraw from the 15 hour scheme. They pay well below operating costs and nursery places are in short demand.

MsJuniper Tue 26-Jan-16 16:56:57

My son's nursery charges a £7 "session fee" for funded 3-hr sessions, so about £2.33 extra per hour. You can only have one funded session per day. Non-funded hours are charged at £8/hr. They show us this quite clearly on invoices.

They are allowed to charge this because they offer what are described as "extra activities" - things like yoga, French singing, cooking class etc. I understand this is to get round the issue of not being allowed to charge top up fees.

Because they are quite open about these charges and what they are for, I think parents are quite happy to pay. I don't agree that it's good business sense to keep your customers in the dark!

HeadDreamer Tue 26-Jan-16 16:57:04

Is there any regulation which says that funded children cannot be charged more per hour than children not receiving the funding (in the same setting)?

No, the nurseries here charge more if you do less hours. Regardless if it's funded. But if you are funded for 15 hours and you are doing 20 hours, then you are effectively on only 5 hours.

Akire Tue 26-Jan-16 16:58:13

I really don't see the issue your childcare bill over all is lower than it was before.
You are paying £15 day not £59
In school holidays you are back to paying the normal rate of £59 per day. Because it's £7.50 per hour it seems really upsetting you. How much is it saving you a year?

Before funding parents paid 100% of childcare until school provision this way at least it is spread out Yes you pay the extra but you have pay roughly the same for wrap around care for nanny or childminder so there isn't a way you can do it any cheaper. Would you prefer nurserys to say we don't take any funding at all?

BaronessEllaSaturday Tue 26-Jan-16 17:11:34

Is there any regulation which says that funded children cannot be charged more per hour than children not receiving the funding (in the same setting)?

It isn't that straight forward, I know the nursery I use has a different contract for the free sessions and because you are no longer paying the full day rate you are no longer entitled to the full day rate so you do consequently pay higher but you would pay the same as another child who was paying for exactly the same hours but not claiming the free 15 hours.

BreakingDad77 Tue 26-Jan-16 17:18:29

An unregulated demand market will always end up in a cartel/price fixing unfortunately.

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