Changes to Free Hours Funding - Are you aware of the implications

[lindsR]

Hi there,

I am a mum of two children both currently in a privately run nursery, the eldest of which has been eligible for the free hours for about a year now. Last night I attended a crisis meeting at the nursery bought about by the changes in the legislation regarding the funding of free hours and have found out a lot of information regarding the situation which I think may be of interest to other parents whose children either receive the free hours already or are due to become eligible. Apologies this will be a long post, but hopefully worth reading...

As of 1st Sept this year, the legislation regarding the funding changes. The two main changes are firstly that the number of hours up to which (that phrase is important - remember it for later) a child is eligible has changed from 12.5 to 15 and secondly that unlike previously, childcare providers will no longer be allowed to charge a top up for the shortfall they receive from the funding. Sounds simple? Well not really, this second part will have a huge impact on the private nurseries providing the childcare as the amount of funding provided by the government is in many cases way below what it costs the provider to give the hours - the result of this is that many childcare providers are now considering withdrawing from the scheme altogether rather than bankrupt themselves by subsidising the governments scheme.

A few misconceptions about the free hours:

"All children are entitled to 15 hrs per week" - The actual entitlement is 'up to' 15 hours a week (for 38 weeks of the year). The childcare providers participating in the scheme have to declare to the local authority what funded sessions they will provide and stick to them. In other words you can't just get any 15 hrs in the week free a nurseries funded sessions could for example be 10-12, 14:00-16:00 every day. If your child only attended nursery on 2 or 3 days a week even though they may be doing more than 15 hrs in total, if there are less than 15hrs which occur in the 'funded sessions' then you will only get the funding for the ones occurring in the 'funded sessions'. Best thing to do here is talk to your nursery and find out which hours they are stating as their funded sessions and make sure your child is booked in for at least 15 of those to ensure that you get the full 15 hrs you're entitled to.

'the government provides 15 hrs free to all children over 3' - would be nice, but in reality the government isn't actually funding this. The amount of funding a nursery will get depends on the borough it's in (not sure what happens where children attend from outside the borough - whether they get the funding from the nurseries borough or the child?s borough). Different boroughs get different amounts of funding from the government also it's up to the individual boroughs how much they keep back for admin/budget contingency. So in some boroughs in London for example they are giving nurseries a reasonable £5.80/hr whilst where I am it is only £3.63/hr which is not enough to cover the nurseries staff costs let along premises, heating, equipment activities etc.

'nurseries have to provide 15 free hrs/week' - there is no obligation for privately run nurseries to take part in the funding scheme. They are well within their rights to decide to opt out of the scheme in which case you would not receive any funding for the hours that your child receives there.

The way pre-schools and private nurseries are funded is different. A pre-school will be funded for a set number of places e.g. 10 children regardless of how many actually attend (e.g. could only be 6). Private nurseries have to do a headcount each term and are given money per child in the headcount. Next year this will change to a single headcount per year which could cause further funding problems for the nurseries (e.g. a nursery which has 10 eligible children in April headcount will only get paid for 10 children for the whole year even if another 10 children became eligible for the hours in the September term).

Previously nurseries have been able to make up this huge shortfall in funding by allowing the parents to make up the difference. It varies nursery to nursery but many will simply just take the money received from the authority and deduct it from the overall bill (for the nursery my kids attend they calculated £3.63 x 12.5 hrs X 38 weeks then divided by 12 months which then gives a figure which they deduct from our bill each month. As of this month it will no longer be legal for the nurseries to do this. This will leave them with a shortfall of nearly £30,000 in funding over the year - clearly unsustainable. This has left them with a very difficult decision

1. Do they swallow the costs? If so they will likely go bankrupt, 63 children will lose their places in a nursery they and their parents love and a number of staff will loose their jobs.

2. Do they put up fees across the board to make up the difference? Will stop them going bankrupt but isn't very fair to all the parents of the other children at the nursery which aren't eligible for the free hours as they will effectively be subsidising the governments scheme for the other children.

3. Withdraw from the scheme entirely in which case the children currently receiving the funding will loose their funding.

These will be the same decisions that a number of nurseries will have to make over the next few weeks. Speaking to the nursery owner and manager who are in contact with a lot of the other nurseries in the area it seems like a lot of nurseries haven't yet realised the implications of what has happened and are only just waking up to it now everyone has returned from holidays. In our area there has been no notification from the local authority to the nurseries regarding the funding changes - they only became aware of it themselves by studying the legislation in detail - the conservatives made a pre-election promise that they would remove the clause prohibiting the top up option from the legislation, but now they have reneged on that promise.

I believe the result of these changes is that a large number of privately run nurseries will withdraw from the funding scheme altogether as it is financially unsustainable for them. If not now (as it may be too late for this term) then they will likely make the move in January. This will mean a large number of children will loose access to funded places as there is unlikely to be sufficient space in community nurseries/pre-schools to make up the number of places needed.

I would urge any parent currently receiving or about to receive funding to discuss this matter with your childcare provided to find out what they are doing about it (or if they are even aware of it) and also to lobby your local MP if like me you think this is an unsustainable situation.

I have also found a petition which people can sign up to register their concern about the changes: www.freechildcare.org.uk/our-petition/

These proposals were first made about 3 years ago, and I remember campaigning then too . It's a great shame they were not killed off then: this close to implementation, it will be harder to do anything about it. Perhaps the change of Government will provide some opportunity though.

It is massively unfair to working families, who need attendance beyond the funded hours.

Good luck with the campaign, and I hope changes can be made before nurseries are forced into closure.

My son's nursery sent a letter home yesterday saying that it is going to be carrying out "a business review on the financial viability" of the nursery. It's LA run so the review will be by the council. I thought at first that it was to do with council funds review post budget but reading lindsR's op I fear this may be a more likely cause

I've signed the petition.

Good post lindsR

Oh wow - this is the first I've heard about this. Has my head been in the sand? Assume this is UK wide?

My son is almost 4 and we receive a funded place at a private nursery so this would definite affect our pocket if this was pulled.

Speaking as a nursery manager this is a huge issue for us.

Just to clarify it is 'state run nursery schools' that are funded by place rather than headcount not pre-schools in the traditional sense.

I'm starting to worry about this.

My DD will be eligible from Janurary for her free hours but as I'm a single mum on minimum wage I get most of her childcare paid for. I wont be able to afford to pay for it myself.

Not to put to fine a point on it, but how the fuck am I meant to keep hold of my job if I can't send her to nursery for 14 weeks a year?! Hadn't realised that it was "upto 15 hours a week" thought it was 15 hours a week end of. Didn't realise it wasn't for all the weeks in the year either.

May as well hand in my notice now if DD takes free hours.

I know it isn't all of the cost, but is it any help to point out that you can get 80% of your remaining childcare costs from tax credits anyway?

Would it work out that way though?

From what the nursery manager could tell me it wouldn't, although her own experience has mostly been with the voucher scheme (my company don't do this).

Maybe I'm ignorant, I have no problem admitting that all this stuff confuses me- tax credits causing most confusion

Mind you, whole thing must be really annoying for others who don't get the help I do with childcare.

We get 15 hours worth of DD1s nursery knocked off the bill, then the rest (and all of DD2s) we get 80% of from tax credits. Tax credits pay the money direct to you, then you pay it to nursery, no vouchers or such needed.

www.entitledto.co.uk is the best site to calculate your tax credits entitlements and so on.

With round figures (and I know these are unrealistic, but just to show...

Say, your DD was in nursery 30 hours a week at £5 an hour, making a bill of £150 a week. 15 hours would be funded- so that leaves a bill of £75. You would ring tax credits and tell them your childcare cost is £75 a week. You would then start getting £60 a week more in your tax credits payment. You add £15 of your own and give the money to nursery (I use a standing order). So, 30 hours of nursery would cost you £15. Hope that makes sense.

Of course, you might be entitled to different amounts, but from what you have said I would guess it is the full 80%.

ok being a little thick here- can you explain again

1. do all nursery/preschool have to designate hours in the week that are fundable? And do these hours have to be 3 each day?

2.So with the new rules
in a private nursery lets say you use 15 hrs all in the designated 3 hr slots a day.
the council pay £3 oer hour- but that is a shortfall for the nursery...you mean they cannot ask the parets to make the difference?

3.so again with the new rules in a private nursery
you use 15 hours but not all in the designated 3 hr slots in the day...that means you can only claim the £3/hour council money for the time the child spends in the designated slots?
and the parents can oay for the extra hours??

ohh i am confused- give me clarity

Hi Vis,

I'm no expert on this, so if there are any nursery managers out there that know better please chime in, but what I understand from what I've been told is:

1. Yes, as of September any privately run nusery has to declare to the local authority what sessions they are designated as the 'funded' ones. I don't believe there is any guidance on when these slots have to be, it is entirely up to the individual. For example our nursery told us they could if they wanted to (but won't as it wouldn't be v. fair to parents) put all their free sessions all day on a Friday as that is one of their quiet days and it would attract more chilren. It is entirely up to your nursery to declare when their free sessions our so you will have to talk to your nursery manager. I belive they are also supposed to state when those sessions are on your bill under the new legistlation.

1. Exactly as you say - the authority will pay them a set amount per hour (amount varies per authority), the nursery then need to provide you those hours they are paid for even though they are loosing money on it.

1. Say you use 15 hours but only 10 of those fall in the funded sessions. You will pay for the 5 non-funded hours privately to the nursery - nothing to do with the scheme. For the 10 hours that are funded you would pay nothing. The nursery would recieve for eg. £3 x 10 hrs = £30 - any shortfall between the amount they recieve from the authority and the amount it costs them (e.g. say their normal hourly price was £5) is money that they loose as they can't claim it back from you under the new system (previously they could). So in this example the nursery would be loosing £20 by participating in the scheme and providing you the 15 free hours.

Hope this helps

Lindsay

Hi Waspie,

If your son's local authority runs the nusery then it will be unaffected by this issue as they are paid differently from the private nurseries. It is most likely in your case it is just a question of the local authority budgets being slashed - which is happening in many areas at the moment.

Lindsay

dribbleface - thanks for the clarification. I'd be interested to hear from you and any other nursery managers on how they are planning on dealing with this situation.

Lindsay they were never allowed to charge a "top up" it's just that they've tightened up on it.

The whole thing is a mess. My childminder ask for a voluntary donation which we happily pay, the pre-school operates for longer hours and can charge for the extra 15 minutes (but you can't make people use it, but most do).

Yes in a daycare setting it's virtually impossible to get around the fees issue.

are not our - wish you could edit these messages.

thanks LindsR

i am going to have a word with our nursery on Monday will update with anything interesting

i work for a private nursery and we have decided to put the fees up. obviously thats not popular at all across our 100 place nursery but its the only way we can continue to offer good quality care for ALL our children. most parents are happy to pay the increase (about 7%) as they plan long term for their child to benefit from the funded sessions too!

Alot of pre-schools have extended their hours over 3 hours to cover some of their costs.

As a nursery manager I can agree whole heartedly with all of this.... our local council's hourly pay for the funded hours is far less than what we can operate: it simply does not cover even the minimum wage for the number of staff required let alone food, drinks, toys equipment and activities....

If we withdraw from the scheme we lose all the support from our early years team, and yet if we stay with it we will be working at a loss

Are you permitted to give a discount for children using over x hours per week?

Just thinking you could increase your hourly charge operate 3.5/4 hour sessions, charge for the extra time but if children day 3 full days or more per week they get a 10% discount on fees? This would work in a daycare setting rather than just a nursery.

Can someone clarify this for me? The manager at my nursery told me today that the reason I'd not had any paperwork to do with DS's free place (which should start this term) is because she is having to ask each parent to record the exact hours their child will attend. She seemed to be suggesting that the problem is that the govt forms give the hours/half hours (eg start at 9, or 9.30, etc), but our nursery starts at 9.15 and she doesn't know if she can change it on the forms.
Our nursery (called a 'pre-school', but operates as a charity, with parents running the committee and effectively employing a manager) only opens school hours. They have 2 sessions a day, 9.15-12.15 and 1.15-3.15, so this fits in with the Govt. funded session times. (I payed nothing for Ds2's 2.5 days last year).
This thread seems to be suggesting that they will have to state which their 'free days' are (eg anyone attending on a Mon, Tue and Wed is free, but if you attend Wed, Thur , Fri you have to pay for Thur and Fri). Is my understanding correct?

My nursery are effectively just knocking the money the government gives me off the bill, not refunding the hours. I was pretty pissed off as it is actually costing me about £50 more than they quoted me 3 or 4 months ago. I didn't think they were allowed to do that, but that's what they are doing.

they have never been allowed to charge top up fees but may do

Bumperlicious they are absolutely not allowed to operate that way. That 15 hours per week has to be given absolutely free.

What can I do though? It's too late to find somewhere else. In actual fact for every free session per week I take I have to pay about £60 a month, this is to cover meals, the fact that the place she has is all year round not just term time, the fact that nursery sessions are 4.5 hours not 3 hours as covered by the grant, plus 'extras' like sunscream etc.

That's fine I understand that, but it did piss me off that they aren't refunding the hours just the grant, I read the same on the Every Child Matters website. My nursery is about £42 for 9 hours so about £5 an hour, they should be refunding me £15 a session, instead they are just giving me £3 whatever it is the government give. Don't feel like I have much choice though. I think the nursery already don't like me that much.