15 "free" hours of childcare

[jdey1969]

My son attends a nursery in Wimbledon. The term after he turned 3 years old, we received a reduced invoice from the nursery. However, I worked out that the reduced amount wasn't enough of a reduction for us to truly be getting 15 free hours. I queried this with the nursery and was told that they only reduce the bill by the amount that they receive from the Council, and not by the normal hourly rate that they charge. This is in effect a top up fee, which is forbidden.

I escalated my complaint to Merton Council who told me that if I persisted with my complaint, the nursery might be forced to close and then I'd have no childcare. I persisted in any case, as I don't like being threatened and complained directly to the Department of Education about Merton colluding with the nursery to find a loophole in the law i.e. by creating a 2-tier fee structure, they can claim they're not charging "top up fees".

Merton Council have now concluded a 3 month investigation. Merton Council have said that as the nursery only publish weekly and monthly fees, my conclusion that the hourly rate was simply the weekly rate/60 was not correct. Merton Council were satisfied that the nursery were refunding the amount that Merton had paid them (using the local funding formula) to me, so I was receiving 15 "free" hours of childcare at that rate. A provider was entitled to charge what they liked above the "free" entitlement.

What this means is that the Council could decide that they'd only provide funding to a nursery of 1p per hour, in which case my 15 "free" hours would be worth 15p per week during term time. What it also means is that parents who put their children in nursery for more than 15 hours are actually subsidising the 15 free hour scheme, by paying a higher rate than normal for those extra hours.

For example, if say your nursery charged £5 per hour for your child when they are 3, and you have your child in nursery for 60 hours per week, your bill would be £300 per week. Now, when the 1st school term starts after they're 3, you'd expect the bill to come down to 45 hours * £5= £225 per week. However, with a 2-tier fee structure, your nursery can say you were mistaken in the belief that you wer being charged an hourly rate of £5 per hour, actually, we've never charged for the 1st 15 hours, but we charge £6.66 per hour for the hours above the 15 hours. Your invoice is still £300 per week.

I am waiting to see what action if anything that the Department of Education will take against Merton Council, but for the time being, the government's commitment to 15 free hours of childcare for 3 and 4 year olds is untrue. Parents could end up no better off than when their child wasn't receiving any "free" hours at all. At best, it could be described as 15 reduced (at your Council's discretion) hours for 3 and 4 year olds.

@MrsHeggulePoirot. There are loads of parents that continue to work and fund the current scheme. My point is that there are parents who are currently right on the margin, many of whom for which it would be cost effective to stay at home but continue to work because they value their career prospects or believe the financial hit is short term. Each year, as nursery fees increase, those on the margin are forced to make the decision to stay at home, which increases the costs further on those parents who continue to work. The domino effect is clear, but isn't apparant to those parents who are still rich enough to not have to make that choice yet.

Personally I am far more concerned about the allegations of parents not getting the 15 hours subsidising the places for those who are, than I am about paying top-ups.

Is that kind of cross-subsidy allowed? It seems very unfair if it is.

Like most parents using private daycare, my kids started going at the end of my maternity leave. So me and DH have been paying full whack for years. As each child turns three we get to pay a bit less, hooray. That's why I'm not sure I follow some of your arguments re economics of free hours impacting decisions of parents to work.

For me I choose not to put them in a private nursery as for me I don't particularly think putting very, very young children into a nursery was something I wanted to do. Leaving them with a childminder for me was an option that I get comfortable with. Lots of friends use nurseries and are very happy with them, as well as those that have not been.

I am not sure I understand this allegation that some parents are subsidising others? Is that at the private nurseries or in general?

I do not agree that childcare should be funded from 0-4 for everybody.

Nurseries and childminders have to go through lots of additional steps in order to provide funded nursery education. A friend of mine runs a small nursery and it has taken a year to get through the audits and other things the local authority imposes on the nursery in order to meet the loacal authorities criteria for offering funded sessions. Many childminders are not involved in the scheme as it involves additional training, frequent monitoring visits/audits, and a lower fee being paid for the funded hours than the childminder would normally charge.
Lizz Truss with her proposed changes to childcare regulations is looking at letting all childminders offer the funding. Not sure how far that has got, expect there are some issues over minimum standards.

As a nanny I have had children in my care attend funded education sessions. Last year we did not get 15 hours, we got a little under 9 hours. The village has one nursery, it simply can not provide enough funded sessions for the local children. As a nanny I am under contract to work a specific number of hours a week, so if a child attends nursery during that time I am still paid. So no cost saving there, just a change of scene for the child, opportunity to mix with a larger group (and more diverse) of children.

I don't think I understand the allegation either, MrsHP.

Jdey, if full payers subsidise the free hours, surely you've been a full payer up till now and you are about to get the subsidy. Are there many parents at your nursery joining now just for 15 hours? Ours has 5 hour mornings and five hour afternoons and you can use 2.5 free hours per session - so anyone getting 15 hours free is also paying for at least 15 hours.

As a nursery designing my fee structure I might be thinking "right, I have space for six babies, twelve up to two, eighteen up to three and twenty-four at three plus. Babies need twice as many staff each as two year old's but if I charge £10 per hour for babies and £5 for two year olds I'll get no babies, so I'll charge £7 and £6" or whatever. One age group is subsidising the other if you look at it that way - but it's the best policy to keep the nursery as full as possible and get customers in at the "baby end"

The cross-subsidisation where 0 to 2 year olds are cheaper than they should be is a different topic.

For the 15 "free" hour scheme, the more kids the nursery have just claiming the 15 "free" hours, the bigger the deficit between what they would have received at the normal rate prior to the 1st term after the 3rd birthday, and what they receive from the Council. Our nursery is reducing that deficit by charging a higher hourly rate than the rate that they charged prior to the 1st term after the 3rd birthday, to those parents who put their kids in for longer than the 15 "free" hours. If the Council funded the scheme fully, then the nursery would carry on charging the normal rate. If the Council decides to pay the nursery 1p per hour for the 15 "free" hours, then the nursery can either abandon the scheme or charge an even higher rate for the unfunded hours.

Whichever way you look at it, the 15 "free" hours isn't free, it is 15 (reduced by however much the Council decides to fund and the Nursery wishes to pass on to parents) hours per week. On top of that, the ability for parents to find these 15 "free" hour places varies considerably. So you have a supposedly national policy whose benefit varies from Council to Council and nursery to nursery, so there is no social justice going on here. It's a lottery.

Either we go for universally free childcare from 0 to 4, paid for out of general taxation, or childcare that encourages parents to work by providing free childcare places from 0 to 4 for just those parents who work, or just abandon the scheme saving the general taxpayer money.

Once again jdey it is NOT free childcare. It is free education. The purpose is not to reduce the childcare bill for working parents but an attempt to get better education outcomes for children particularly those in disadvantaged backgrounds. So I don't think it should be abandoned just because you feel it's not "fair" and not giving you the reduction on your childcare bill you expected.

The other interesting aspect of the 2-tier fee structure is that dependent on the mix of kids in the nursery, the profits that the nursery makes in a year could fluctuate wildly from year to year, dependent on how many kids are totally free, how many there part time and how many full time. Having introduced the 2-tier fee structure, the nursery will now have to encourage full time working parents and discourage part timers and stay at homes.

Where would the money come from if the council paid the same rate as the nursery charged for unfunded hours?

We are in the borough of Richmond, and I was so excited to get the 15 hours of "free" nursery as DD only does 9.5 hours a week over three days. However, we still have to pay a "top up".

One of the parents of the school called up the local authority and because the school opens for 3 hours and 10 minutes, they can charge whatever they like for the extra 10 minutes a day. The LA pays three hours per day (this can't be spread over the week).

Very sneaky, but there you go.

@trixymalixy: The 2-tier fee structure has the exact opposite effect to the social justice agenda that you seek to promote. Private nurseries will increasingly abandon the scheme or discourage the disadvantaged and part-time workers from sending the kids to nursery. There aren't enough state nurseries to provide free places. It is unsustainable. Full time workers have to pay increasing fees, which encourages part time working which hits nursery's profits, which means they have to hike the fees further. It's a death spiral for the industry.

@nannynick From general taxation. I think that totally free nursery places for a full working week for parents that work full time at state schools is a workable solution. This encourages people to work, and is self-funding since the more people that work, the higher the tax revenue which in turn can pay for extra places.

15 hours here can only be taken in a council run nursery for this exact reason. If you send your child to a private nursery you cannot expect your council to foot the bill for yr choice. Just the same as if you chose to send your child to a private school, you don't get the money from the council that they would have spent on your child's state funded education.

They do discourage part time places already, by charging a higher hourly rate for half a day than they do for a full day . It's standard practice around here for nurseries and childminders and I suspect across the whole industry.

Around here there are year long waiting lists so hardly a"death spiral".

And it wouldn't surprise me if more nurseries stop offering funded places as the gap between what the government funding and the hourly cost of running a nursery increases as they are not rising at the same rate. Particularly if people who don't have a realistic view on the practicalities of running the scheme get their knickers in a twist about it. Personally I'd rathe see transparent top up fees.

@GlaikitHasHerFizzBack.

Explain to me what childcare options there are for parents that both work. I'm only aware of childminders and private nurseries. The point's previously been made that there aren't enough state nursery places available currently.

The state nurseries only allow you to send your kids there for 15 hours. If they allowed me to send my son there for the same number of hours as schools offer and every child was guaranteed a place, you'd have a point.

Childminders are still a private option and are often more expensive than private nurseries.

@trixymalixy. So solve the mystery as to why nursery fees have gone up 77% over and above inflation for the last 10 years, there is massive demand and yet nurseries are claiming that unless they're allowed to charge top up fees, they'll go bust.

Jdey - are you deliberately ignoring the fact that the 15 hours is about education and not subsided childcare?

Exactly Trixy - most daycare settings would prefer 100% full time children I expect - easier for planning.

Dh and I both work. I only 3 days at the moment, but I plan of going back full time within the next year. Ds will be 2 next month so won't qualify for the free hours for another year

The way it works here, ds will go to the state nursery attached to the primary school he will attend. Childminder will do the drop offs and picks ups if she has him during those times, I in return for that pay her a 50% retainer for her to be "on call" for ds during these times. This will continue when he goes to primary school, only I suspect dh or I will drop him off and he'll only be in paid for childcare after school hours until one of us picks him up. After school hours are hard to come by round here and rightly so, my CM charges slightly more if you are an after school place only. Her fees still come well below the national average and She is excellent. Private nurseries round here have you by the short and curlies with their fees and IMHO are horrible soulless places. I just couldn't have sent my child to one of those when I went back to work. I'm not saying all private nurseries are like that, just the options I had.

You seem to want a convenient one stop shop, where you drop in the morning pick up at night, without any extra hassle. If you wanted that round here you would have to pay a premium, which is what you are currently doing.

Jdey - allow me to explain. I'm an accredited childminder.

The reason costs have gone up is because our running costs have shot up.
Food and petrol are easily my biggest expenses: I'm sure you'll have noticed the increases yourself.
Add to that the much more expensive nursery equipment and resources that we're expected to have. Childminders used to be able to borrow these from our LAs. Those budgets have been cut by the Government. A lot of LAs sold them off on Ebay to raise funds - no doubt many parents benefitted.

Then there's the so-called free 15 hours. We have to subsidise it ourselves. In my county, we aren't allowed to charge different rates or top-up fees. We therefore lose money on free places. I know a lot of places do charge illegal top-ups, load their fees etc..

Then there are all the policy changes. Did you know that each change makes the associated books, trackers (if used), diaries etc. we've bought invalid? They have to be replaced. They are expensive. We also have to undergo yet more training: this eats up budgets, too.

Training. It's compulsory. We're measured on it. Some is legally required. Training courses have tripled, even quadrupled. At the same time, the Government and LAs have slashed training budgets and bursaries.

Insurance and registration costs have gone up. For example, I have to pay to register under the data protection act for no real benefit that I can see. I have to register as a food business if I want to provide children with hot meals and attend more expensive training to do so.

Increased paperwork. For nurseries, this often means employing someone to cope with all the administrative costs. I'm in the same county as Nannynick and can confirm the heavy paperwork load required just so you can have your free entitlement. We childminders have to do this in the evenings, away from our families - answering pointless questions on how we preserve the dignity and privacy of children while we're changing their nappies. My LA has spent a fortune on this Quality paperwork and associated "training", preferring to this to properly funding the entitlement itself.

The training books many of us buy (because the LA training courses these days are pretty dire - no money, you see) cost between £15 and £30 a time. And that IS on Amazon.

And then there's the parents themselves.
Do you know, I've lost thousands to late-payers, non-payers, those who book a full week place months in advance then, at the last minute, announce they only need you for a day because they negotiated fewer hours and got Granny to do the rest? Great for them: not so great for me and my more honest clients who end up having to pay for it all.
At the same time, tax credits and subsidies have been cut.

There are increased rentals and mortgages affecting all settings. My daughter's preschool was asked to double their rent last year or be thrown out of the village hall they use.

We are not, I do assure you, sitting here rubbing our hands with greed while we work out how best to fleece you of your free entitlement!
The people you should really get angry with are the Government and LAs who burden us with ever increasing demands and costs and are doing nothing to address the real reasons that childcare costs are so high.
Far from easing the burden, the Government proposals in More Great Childcare look all set to increase costs! Your childcare could be about to get a whole lot more expensive. No doubt that's what's behind those nice tax breaks the Chancellor is giving so many of you

Fantastic post Tanith

Very well written Tanith.