Nurseries cannot charge extra to access free hours: updated guidance

I'm confused.

So our nursery has a minimum number of days you can attend as part of the contract (3) and have a monthly charge above funded hours to cover unfunded hours and extras. It works out as £60 a day with funding.

It's quoted in the invoice as

"Consumables / Sustainability charge for funded hours, Universal 570 pa / 12 mths, Extended 1140 pa / 12 mths. Includes but not limited to food, snacks, drinks, nappies, nappy creams, sun cream, use of waterproofs, sun hats plus activities such as teacher led sessions, campfires, etc."

Are they saying they can't do this? And as far as i know is not optional at all.

Also what top ups some places feel the need to charge will also depend on what rate their LA pays them as it does vary somewhat.

I know from a friend who is a childminder that there is quite a wee difference in our LA and the next one along. Multiplied by the number of children the average nursery can take that could add up to quite a sum.

You are very naive if you think that that £320 will result in a profit.

There are on costs beyond the minimum wage for NI, sick and holiday pay. It adds a further 25% to the wage bill typically.

Nurseries pay business rates. My daughter’s nursery pays £110 per business day in business rates.

The premises are usually rented, ballpark figure is £30,000 per year (low side). That’s another £120 per business day.

The nursery also needs heating, lighting and insurance. Utilities typically £10-15k
pa so another £60 a day. Insurance another £15 per business day.

So far we’ve chewed through well over £320 in fixed costs and the nursery owner is yet to pay herself, nor feed and entertain your kids.

Tell me again how the subsidy works?

Any child over 9 months with working parents will be entitled to some free hours from September. One nursery locally have put their prices up in advance of this as their top up charge is high, the owner has openly admitted putting the price up means the top up only price looks like a bargain.

(The owner doesn't believe funded places shouldn't exist - they are very open about that)

The biggest typical cost to a nursery is the mortgae/ rent - nothing to do with wages

Not in the UK but I can't understand how it makes sense that the rate is the same regardless of where you are. Staffing and premises costs are going to be far higher some places than others. So I can understand how some nurseries manage fine, but realistically if you live somewhere with high staff costs, high turnover of staff, expensive premises costs, it just doesn't make sense.

My sons nursery recently sent out their new fees and I noticed for the under 3s the daily rate has gone up by 25%. That’s not a coincidence, it’s to subsidise the free hours they are having to give.

Yep, another dumbarse government oversight.

It shouldn't be this difficult - the government are right to introduce the funding that they are, they are wrong to involve so many stipulations that nurseries have to jump through, most of which mean it is financially not viable to open their doors!

Daughters nursery is considered one of the best in the county, we had to put her on the list 18 months before she started, it is a wonderful setting that does so much good.. and yet it is struggling to stay open. It is currently battling the council to ensure the policies are in line with everything. The council are battling back instead of supporting .. all v difficult!!

I am more than happy to pay a top up fee if it means the funded hours can continue and the nursery is viable to stay open!! It's a small price to pay compared to the 100s per week we were paying before funded hours came in!!

This is showing a lack of awareness of costs (and I speak as someone who does not own, or work in a Nursery, nor have dc there).

You are only getting £47.04 per hour, if there are 8 dc there, all day, every day.
If there are just 9 children in the room, you need 2 members of staff, but will only be receiving £52.92 per hour. That starts to make the sums look very different.

As pp has said, for a practitioner to receive £15ph, that costs the employer quite a bit more - Employers NI contributions, Pension contribution, etc, so that nudges it up to about £21ph.

You can't run a Nursery with minimum staff levels.
You need a Manager, a SENCo (who needs release time, if not FT), cover for those on courses, those off sick, those on maternity leave, bereavement leave, annual leave. You need additional people to support room staff when you have children with significant needs. All staff need training (First Aid, Safeguarding, Prevent, Food Hygiene, SEND, specifics for children who have specific medical needs, etc etc).

They also receive extra funding for children on SEN register

This is incredibly naive. This is something I know a lot about.
A very small % of children with additional needs get any additional funding.
Funding is worked out differently in different LAs, but even the dc with the most significant needs, who need 1:1 for all the time they are at Nursery, don't get anywhere near full time funding, and don't get anything towards all the time the SENCo will be spending meeting professionals, filling in paperwork, etc.
It would be wonderful for all children to be well supported, but the funding is not there for that.

My daughter's nursery don't charge extra and their team is amazing! A very sought after nursery with people all over the city wanting to bring their kids.

My DD is with a childminder that I pay a top up of £22 a day for which is very reasonable, my DD adores her and I don’t mind making sure she’s making enough to live.

the local nursery charges £29 a day + wipes/nappies/lunch on top of that for funded hours or £90 for a day(7 hours) + bits for non funded.

It’s not a surprise that many parents choose to stop working.

surely if nurseries close down then there will be a childcare crisis?

Most of the buildings they use to care for the DC are either rented or being bought by mortgage. These high costs need to be taken on board along with water rates, insurance, NIC's for staff which is going up in April, electricity, gas etc not just staff cost. Meals should be extra as parents would have to feed DC if not at nursery. It will end with nurseries closing or refusing to accept DC in free hours.

Childminders are only exempt from publishing the extras they charge for on the LA site is how i read the guidance.

Well it's working for them, they recently opened up another nursery in the next town. They also received an outstanding Ofsted rating last year which shows they are providing good quality care.

where your child is, if they are in nappies they need nappies, likewise food
Why should parents not be prepared to pay for them/supply them?

Childminders with under 10 places will be exempt from this apparently.

However, I and my local childminding group have decided not to offer funding to over 3s.

You missed other staffing costs: holiday and sickness cover, NI, recruitment and training. This will all eat significantly into that £320 especially because they all apply to management and administrative staff too. You can generally reckon an employee costs 1.3-1.5 of their salary as a rule of thumb.

What about on costs for the salary of a member of staff? It doesn't just cost the provider £15 per hour. They have to pay national insurance and pension costs on top of the £15 per hour.

Also a lot of settings have higher ratios than legally required as sensibly not many think a 1:13 ratio is really that safe for a load of 3 year olds running around!

No it starts from £5 for three year old all the way up to over £10 for nine month olds.

This is such a detailed explanation thank you. I suspect this will only be a northern thing though - here in the south east (even though I'm technically in a 'cheaper' part) it's just so expensive. If we didn't have kids settled in nursery and school and family and friends around us I'd definitely consider relocating up north. It upsets me there's so many lovely places and I work from home so I could earn the same amount yet buy a bigger house for a third of the price of ours. Anyway I digress!

It should be a sum of money not "hours".

Lancashire. The nursery gets 5.88 per hour for a 3 year old, a full day uses 10 of the free hours. Ratio of 1:8 for a level 3 practitioner, higher ratio if it is level 5 practitioner.
So 8 children equates to £47 per hour x 10 hours =£470 per day for 1 level 3 qualified. If you paid £15 per hour to the staff, which is actually pretty high for a level 3 childcare practitioner, there is still £320 per day left just for that group of 8 children to cover meals, running costs, managementwage/profit, meal, facilities. The nursery has about 50 children in total, some under 3s which they receive higher funding rates for so they will be getting that extra £320 per day a few times over. They also receive extra funding for children on SEN register and pupil premium for low income families.

Depends on local rents, rates and staffing costs ..lots of younger apprentices are cheaper than older staff. Also on the amount paid by local authorities how it can be enough in London on £5.20 an hour is debatable.