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
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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.
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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.
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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/