To think some nurseries are pleading poverty unfairly?

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We are currently looking at nursery for our DC and quite a few locally charge a top-up fee for funded hours. When we queried this, they said it was because the rates paid for by the government via the councils are too low.

So, I asked our council what they pay, and it's pretty much the same rate per hour as most of the local nurseries charge normally - which would usually cover their costs.

I'm hearing nationally many nurseries saying they will close if they don't charge additional fees but it seems that some are profiting by getting their full funding and top up fees. I understand that each nursery is a business and they want to make a profit, but I wish things were a bit clearer from them about why they need more.

I mean, these are private firms, is it really so odd they are making large profits.

I do think it's complicated, because I equally do think many small independent nurseries are struggling and their costs are/have genuinely gone up a lot in the last couple of years.

But we live in a society where private companies make profit and I don't understand why that's shocking to people?

I couldn't agree more.

Agree mostly, however no, you wouldn't end up with poor quality and broken toys if settings were operating on a not-for-profit basis, whereby surplus funds are reinvested in the business. There should be a maximum 50% contribution from parents and at least 50% full funding from the govt, in my opinion. The entire sector needs an overhaul. It's an essential service propping the entire economy and women's participation in the job market, it's there to be accessible to working parents, not prohibitively expensive and run largely by profiteers.

And if you’ve ever been inside a Busy Bees , you would have been shocked they can profit that much

Labour introduced academies.

Why did you quote me to say this? I didn't say anything related to what you posted?

Ours recently increased their fees when the free hours for 2 year olds came in this month so parents are paying the exact same amount they were before and in some cases even more as they also have to pay the "top up" on funded days.

A very quick google finds for 2 year olds give rate £7.95 is less than a local nursery £8.80 per hour and for 3 and 4 year olds £5.92 is well under the £8.47 nursery fees are.

Also, Labour did introduce certain initiatives, including PFI in the public sector, but it's the Conservatives who misused it and stretched it over during their time in power because they do indeed LOVE private ownership and will achieve this at the expense of ridding public sector with private equity debts and then gradually starving it of public money, but not before private equity 'investors' pockets can be filled. Don't be daft.

I had this issue. It was all about the money and id have to top up the gov funding etc to help keep them going. I declined. Went with a childminder instead. Much more straight forward in terms of payment

Some of the larger chain nurseries, yes they may be able to absorb the shortfall and still turn a profit. You get what you pay for though trust me.
Smaller Private provisions are struggling to make ends meet and believe me, without the consumables fee, they will close.

My main issue is the lack of transparency. Of course, some nurseries run with only a small profit and any change could tip them over the edge.

But there are also companies making huge profits and still charging top up fees.

Then don’t use the huge companies? Trust me the quality of care in these large chain nurseries is “variable” at best 🤷‍♀️

Where do I find that part?

I always paid top-ups and was happy to because our nursery was amazing and the staff paid more than minimum wage. The ratio was higher than the minimum and the food was good.

For 3 year olds the government rate is £5.62 an hour for 38 weeks of the year. That is really very little.

Assuming very basic ratio of 1:8 on minimum wage you’d take out £1.60 (and eighth salary inc employer NI and pension) and say another £1 contribution towards a manager’s salary. Bigger chains will then have other staffing overheads like regional managers, payroll etc. So out of that hourly rate at least half would be gone straight away on staff. You’ve then got electric, heating and water. Then you’d have to pay for breakfast, lunch, dinner and snacks. I can’t see how it would add up at all if you had to pay rent on top.

Just remember everyone quoting government rates, this varies by local authority. It is not a blanket amount.
Also the rate given to each local authority by the government is not the rate received by the setting.
The government say that the provider should receive at least 95% of the rate. However once our local authority have done their very complicated calculations, they take off about 8% in our area, some areas will be less-some more.

Big figures but it's a big chain.

It's only £252 per year per child
Or
£1,043 per staff member
Or
£26,000 per branch

Break the numbers down and it's really not that much at all.

Basically, if they charged a fiver per week less per child, they'd be loss making!

Just shows how tight the margins are even at a huge chain! Same applies to supermarkets like Tesco. Big "headline" figures for profit, but break it down per branch, per customer, per employee, and it's pretty small and basically on a knife edge between a profit and a loss.

You have the option of not using the free hours and pay directly, no?and then it’s straightforward

I agree. I also work in finance for a central gov department and some local authorities are also completely crap at managing money. Sometimes it's that they don't have a good CFO but often it's because the local councillors are batshit. The CFO should be managing that appropriately but it's difficult in local government if you're the one having to say No all the time.

I do think the majority of the public would be shocked at just how badly local government is run. I wasn't aware until I got the job I'm in now and even after several years I still sometimes get the WTF moments when you realise what some of them have been doing/buying.

That's not borne out by the evidence. PFI actually started under John Major but was massively expanded under the Labour Government who saw it as a good way of building public buildings without adding to the debt on the balance sheet.

It's been the Conservatives that changed PFI to PF2 (removing most of the ability of the private sector to print money) and then removed the ability to do PFI at all.

Under the Labour Gov public sector bodies had to use PFI as their options to borrow to do a standard capital build were significantly restricted. PFI is one of the things I'm responsible for in my sector so I'm pretty clear on the history of it.

Some Director level posts in local authorities also have salaries that are higher than the prime ministers, it’s shocking. And some of these posts are dubious like director of communication on £170K - for a local authority???

You keep telling that to yourself forgetting 60+ PFI schemes progressed by Osborne which riddled the NHS with enormous debt.

I'm not telling myself anything @Berlioze. Everything I said in my post is factually correct. Yes NHS have taken on some terrible PFI deals which their CFO should have vetoed because the affordability was based on budgets increasing every year which is never a given in the public sector. And some of these happened under the coalition Government. But other than schools there's been very few PFI deals that reached financial close after 2012.

That's because HMT published an analysis of how crap the vfm was for PFIs in 2011. It's not as simple as stories bad and Labour good. The main explosion of PFI happened under Labour. Now you can argue that investment was required and this was a good way of delivering it - but the facts speak for themselves. Look at the HMT PPP data publication and it shows when the deals reached financial close.

The top-up fee includes things the government doesn't provide for like running through holidays. The free hours apply to term time only (there are roughly 13 weeks of school hols scattered throughout the year). Also nurseries/preschools can make charge for: crafts materials, food and nappies/wipes/cream. I'm always surprised that people are surprised that the government doesn't cover their childcare costs. Ours was the size of a London mortgage...

You pay full price fees during school holidays though because, as you say, funded hours are term time only so why would I need to pay a top up to also cover school holidays when I'm paying full fees during said holidays? (Appreciate a lot of nurseries offer to spread the 30 hours throughout the year but it's the same thing, you either spread it through the year so receive less funded hours each week or you receive 30/15 whatever during term time and pay full fees during the holidays).