check if the village hall ( council owned?) has its own liaibility insurance. this doesn't negate the Groups need for insurance, but maybe this can explain the difference?
i don't know. just a suggestion.
if they are setting up what will be in effect a community group they need to assess funding options, the council usually has something called a 'community chest' or a small grants application for community groups - this can be finding up to 500 or 1000 pounds. certainly help set the group on its feet and help them financially whilst they are getting their costs worked out - which tey should do beforehand btw.
i think the group should consider charging the parents a small fee of maybe £2 per session. its not much but it will certainly help towards ongoing costs.
your local council will also have a funding officer or a grants officer, and this person can help the group identify what grants are available to them
it would be worth asking the council if there is a community worker in the area that might be able to help with grant forms
when applying for a grant, you will obviously have to set up a bank account. to do this you will have to have a 'CONSTITUTION' or a set of rules for the group.
you can google constitutions and just change the working as appropriate - or ask another toddler group in the area how they do things.
it would be well worth while asking the local council if there are any parent and toddler groups in the area and visit them to see how they run things and how they deal with any associated costs.