Government funding forcing nurseries to go bust?

[StrongbutTired00]

Can someone explain to me how the government offering 15 and 30 hours free childcare is making nurseries go under? I read somewhere the government pays the nurseries £4.40 ish per hour per child, why can’t the nursery say that’s not the rate we charge? It’s too low etc? I personally don’t get any free funding for my toddler and her nursery charges £7.40 per hour! Why aren’t the government paying what the nurseries actual rates are? Or are the nurseries over changing parents? I’m confused.

The government pay a set amount and then the nurseries have to charge parents extra/a top up fee. Parents then complain. The funding is only for 36 weeks

So even if my child got 30 free hours at £4.40 paid by government I would still have to £3 per hour myself? So I wouldn’t actually get free funding?

Well this is the point, if you don't, then the nurseries don't earn enough and will go bust. What do you want them to do?

If you earn under £100k a year you can still use the government tax free childcare service to get up to £2k off your bill a year. We have gone from playing is the childcare bill more than a £1k this month or less. The nursery still have to pay for staffing, utilities, food etc. I would rather pay more for childcare than have ratios reduced. If you pay peanuts you get monkeys.

tge Government needs to start calling it “subsided” rather than free

Nurseries and childminders are struggling financially to keep afloat because the funding is too low

But the point is they're not allowed to charge a top up fee. They get round this for charging for hours outside the school day or charging a lot for lunch, tea etc. but it's not enough to make up the deficit often. One and two year olds paying full fees subsidise the three year olds. The new model of 30 hours free for 1 and 2 year olds will make nurseries even more stretched.

Government funding isn't enough to cover what it costs to run a nursery. Nurseries are not allowed to charge a top up.on the funded hours. Some will charge for extras like sports activities or Spanish lessons. Or charge a ridiculous amount for "lunch club" - the half hour in-between 3 hour free sessions.
The shortfall is often made up by charging more to the fee paying kids.
Nurseries cannot run safely and efficiently, paying staff a living wage, paying energy bills, rent and other overheads, resources etc, on the hourly rate the government pays for each child. So if a pre school can't charge anyone extra, they can't run and will close.

If the government said they would give everyone a £5000 childcare voucher (approx £4.60 x30hrs x36 weeks( everyone would be ecstatic.

Call it funded hours, then people are upset as it doesn't fully cover the costs of thos 30hrs.

That's clearly what should happen. And people shouldn't moan about it because it's an amazing contribution. The whingers shouldn't forget it's not 'the Government' who's paying for it, it's the taxpayer (and though I don't begrudge people, it's also worth remembering that it's people who didn't get a penny in childcare that will be largely subsidising this themselves).

But it's ridiculous that nurseries can't charge top up fees and doesn't help anyone (and I imagine it's harder across the country as everything, including wages, costs more in the South East).

If you look at the original govt discussions (not secret - in published papers) their explicit aim by lowballing the hourly payment was to drive down nursery costs per hour. They made the stupid assumption that nurseries that charged more were fleecing their clients, rather than (more likely) responding to their particular cost profile (for example, the nursery my daughter used to attend was in a converted house - the running costs will probably have been higher than a purpose built facility and indeed they did later go bust).

A subsidy would at least have been honest.

Although I think nurseries had concerns that some parents might not pay so preferred to get money directly, even if low?

And people shouldn't moan about it because it's an amazing contribution. The whingers shouldn't forget it's not 'the Government' who's paying for it, it's the taxpayer

People complain because it is extremely widely referred to (by government and elsewhere) as "free" hours. They talk about how wonderful they are for extending these "free" hours to all nursery children soon.
Our nursery doesn't charge a top up, it is possible to attend for the 30 hours totally free, but I know that that is extremely unusual.

It's been a problem since top ups were banned.

A lot of independent nurseries closed following that; the chains did somewhat better (because of economies of scale and centralised back-room functions)

It's led to a variety of sharp practices (mentioned above) to get in a bit of extra income to balance the books.

The chains have financial backing from venture capitalist firms.

Can nurseries refuse to take the vouchers?

(genuine question - my children are well past nursery age)

I think nurseries don't have to offer the funded hours.

The funding does not lead to free childcare, it simply leads to a lower bill. Parents get 15 or 30 hours of funding for 38 weeks of the year. Many chains ‘stretch’ this discount and reduce monthly fees equally over the course of a year. The funding rates are woefully inadequate given the overheads that nurseries, both independent and chains, have. The rates have never risen in line with inflation and were not set high enough in the first place. Staff must be paid at least the minimum wage, which has risen over the years. Supermarkets still pay more than most nursery roles.

As PPs have said, there is a lot of sharp practice around. Parents who don’t pay fees are asked for ‘voluntary’ top up payments. Meals are charged at higher than average rates to subsidize things. It is rare to find a nursery where parents pay nothing at all, even a term time only setting. In short, it’s a mess.

The DfE’s latest EYFS consultation opened on May 31st and runs until July 26th. Maybe vent your spleen there?

Thanks.

Yes but unless a very affluent area which parents would use them and carry on paying full fee?

I don’t know - as I say I am past that stage and had to pay full fees for mine, but if a nursery said they weren’t accepting the vouchers but also were not asking for voluntary contributions or charging high fees for food etc wouldn’t parents be just as well off going there? I realise that that does away with the benefit of having the vouchers in the first place, but the situation as it is seems untenable.

I'm a childminder. The govt rate for 15/30 hours is £4.43 per hour. My hourly charge is £7. I am not permitted to charge for the shortfall, because the provision is free at the point of service to parents/guardians, and the stated purpose is to allow all parents/guardians of 3 year old children to access childcare so they can work. I can charge for "extras" - meals, outings etc, but it doesn't make up the shortfall. A parent could, for example, choose to send a packed lunch instead, making some of these possible extras not applicable anyway.

I can charge extra for under 3s, on the basis that younger children take more of my attention, but it doesn't help my bottom line all that much.

The voluntary contribution or consumables charges won't be as high as the normal fee just making up the difference so in most cases £1 or £2 so still saving £4 or more an hour £240 on 15 hours or £480 on 30 hours a month. If full fees are £5 to £6.
I could do a lot with that sort of money.

The latest guidance is also restricting the type of top up....you can't charge for things that are normal required things in the EYFS ....so no craft for example. We also have to bare in mind excluding children from extra classes or outings due to financial discrimination and should try to avoid putting unnecessary breaks in the day....such as lunch times.
It will be interesting to see how many settings can follow the guidelines and survive.

Nurseries don't HAVE to offer free places (for 30 hours a week), they can reject it. They can also specify when the 30 "free" hours will be used over the week. Nurseries cannot charge top up fees for these fully funded places.

However, where I live, fully funded (free) places are non existent.

Instead, nurseries take the 4.50 rate from the government for the 30 hours and subtract it off the hourly rate you pay for those 30 hours. Hence you end up with a good discount, but by no means a "free" place.

Just to add to this too, if nurseries DO offer the fully funded places, then they have to push the shortfall (as 4.50/hour does not cover all overheads etc) onto the places for younger children, otherwise they would go out of business!

I don’t understand what you mean. Nurseries can refuse to offer 15/30 ‘free’ hours funded by the government (lots of childminders refuse for example). Parents of children who are entitled to those hours would then have to pay full fees themselves to use that nursery. Most don’t want to (because even with the top ups, parents still save thousands per year using the funded hours) so will go elsewhere to a nursery which does offer the funded hours.

If the nursery don’t offer government funded hours and don’t ask for voluntary contributions and don’t charge lots for food, who do you think is paying for the child to attend?

I have to pay £2-300 a month for my daughter to be looked after for 3.5 days per week. It is considerably less than I paid before she turned 3 and I consider it very very good value for what she gets, so I don’t moan about it. the reason people moan is that the name ‘free hours’ gives the impression it’s free, when in fact it’s not, but it is still very generous in my opinion.