Not receiving full Early Years Entitlement

[outofbreath]

Our nursery gives us a 12.5pc discount on our nursery fees.

When our child turned 3 we got our early years entitlement, but I've noticed the nursery are taking the "early years entitlement" from our fee before they apply the 12.5pc discount, thus pocketing 12.5pc of the "early years entitlement" claimed from the local authority.

I think this might be a mistake, can anyone confirm that?

For example:
Yearly Annual Early years entitlement: 570 hrs * 3.77 (which is the local authority hourly rate for Early Years Entitlement) = £2148.9
Monthly Annual Early years entitlement: £2148.9/12 = 179.07
Cost of childcare: £1000pcm

The nursery do this:
(1000-179.07) - 12.5pc = 718.31pcm

I think they should do this:
(1000 - 12.5) - 179.07 = 695.93pcm

There's no suggestion of any wrong doing but if a clerical error is costing me a couple of hundred quid a month I'd like to know about it!

Details of Early years entitlement in our area:
www.gov.uk/free-early-education
www.westsussex.gov.uk/living/children_and_families/childcare_and_early_education/free_entitlement_for_2_3_and.aspx

I think the nursery are correct.

They are discounting the fee you pay, not the hours you receive free from the Government. They are probably already losing money on the free entitlement as it is.

In the same way that shops with special offer prices for certain items will not offer a further discount on those items.

Assuming you are in England (only rules I know). They should only be charging you for hours which are not funded (with whatever discount applies). There should be no deduction of funding shown, as those hours are free.

I think the nursery is right
Say for example they charge an hourly rate of £8. They will then be already making a loss on the funded hours if they only receive £3.77 instead of £8.
Now you want them to give you a discount of 12.5% on the funded hours too?
But you can't get a discount on the find d hours as you are not paying for the funded hours

Tanith & insancerre. Both of you are saying the nursery lose money on the funded hours which makes me wonder if you've misread the numbers.

The nursery are currently making additional money from the funding not less. By keeping 12.5pc of the early years funding they get what they used to get plus 12.5pc of the "Early Years Entitlement" funding. If they calculate it their way their income will be higher than before, if they do it the way I think might be right they get exactly the same as before.

Put it another way: Supposing my child was only there 25pc of the time and we received a corresponding 75pc discount. Then the nursery would be keeping £1611 and reducing my fee by £537 per year.

For all I know that may be correct, hence my question.

I think you don't understand how the free entitlement works.

Forget percentages. That discount is applied to the amount you pay for your child's hours. You are not paying for the free entitlement hours. They are free.

The free entitlement is being funded separately by the Government via the LA. Your child has those hours free: you don't pay for them so they can't be discounted.
However, the funding supplied by the LA is often well short of the setting's fee. The setting has to subsidise the shortfall and that is where they are losing out.

You shouldn't even be wondering what the nursery are getting for the funded hours. It should be presented to you as 15 hrs free regardless.

The amount they receive is not to be deducted from your bill but rather the hours are deducted from your invoice.

So if it used to be 50hrs x £5 with a 12.5% discount then now it should be 35 hrs x£5 with a 12.5% discount. Don't even worry what they collect for the free hours as that's a contract between the nursery and LA and likely to be nowhere near the price they charge parents (usually around £3.50-£4ph).

Btw the difference between your calculations are approx £25 not 'a couple of hundred pounds'.

TeddyBear, that's absolutely the way it SHOULD work, but very often doesn't. Our previous nursery didn't charge for the funded hours, but then bumped up the price of the hours of 'wrap-around' care such that in total it miraculously came to the same amount as a full day's fees minus what the LA paid for funded hours. I got nowhere arguing about this with them and the LA, they just weren't interested. We've moved to a nursery now which calculates it correctly and our bill has dropped from over £300 a month to more like £50.

That's because it's the monthly difference, not the annual difference

"bumped up the price of the hours of 'wrap-around' care such that in total it miraculously came to the same amount"

Yup, that's what's happening here, Lizzymint.

As it happens I'm happy with that arrangement because my child loves the Nursery and benefits from it massively.

However, due to a minor clerical error I seem to be failing to get the full price of the funded hours passed on to me. (I should be saving £2148.90pa and I'm actually saving £1880.34pa. In other words £268.56pa worth of care is being paid for twice, once by the LA and once by me.) I was asking if that was normal, I think I know the answer now.

Thanks to all.

(Also thanks to Teddybear5 for pointing out the typo in the OP- "couple of hundred quid a month" was, of course, intended to be "couple of hundred quid a year" as shown in the posted figures.)

You say in your op thatvthw nursery give you a discount on hour fees
You now have lower fees as your child receives some free hours
You are still getting the same discount on your fees
You can't get a discount on the free hours as you don't pay for them, as they are free
The nursery isn't making ng money out of them.
As a matter of interest, why do you get a discount?

OP, your nursery shouldn't be saying "cost is £1000 per month, subsidy is £200 per month" so cost is £800 per month which is what they seem to be doing.

They should be saying "cost for 100 hours at £10 per hour is £1000, 40 hours are the free entitlement hours even though government only pays us £5 per hour, therefore we now charge for 60 hours ie £600"

Then any discount gets applied to the £600.

(Nb - numbers are picked for easy calculation not your actual fees!)

It would be nice if it worked that way YonicScrewdriver, but my experience is similar to Lizzymint's. They pass on the early years benefit to the parents in full and adjust the price of the "non-core-care-stuff" so the parent pays for the shortfall between the real rate and the LA's pitiful rate.

My problem is that I'm not getting the full early years benefit, because of the point at which they knock off the 12.5pc. Well, I say problem, it's not really a problem because the nursery is wonderful and this is a very minor quibble.

insancerre - I can't relate most of your points to my OP, I think you've got the wrong end of a few sticks! Regarding your last point the reason for the discount is irrelevant - I only mentioned it to explain where 12.5pc of the funding is going. Since you ask, the 12.5pc is because we don't need care all year round. We don't have to pay for the weeks we don't need but for convenience they charge us as "full timers" all year round and knock 12.5pc off the pcm invoice thus averaging the weeks off over the whole year. (Which perhaps demonstrates again why I think it's a mistake - because if they just invoiced us a bit less in the relevant months for the weeks we don't use there would be no discount operation and 100pc of the Early Years Discount would come to us!*) However, the reason for the discount is irrelevant, it could be a "cuteness discount" for all the difference it makes. The point is they are reducing the invoiced amount and by lumping the Early Years Entitlement into that calculation they are (inadvertently?) reducing the Early Years Entitlement they pass onto me by the same amount.

• In fact that's a rather obvious solution to the 'problem'.

FYI the EY funding only covers school terms so it shouldn't be taken off every week anyway.

"FYI the EY funding only covers school terms so it shouldn't be taken off every week" anyway."

According to the link in my OP:

"All 3 and 4-year-olds in England are entitled to 570 hours of free early education or childcare a year. This is often taken as 15 hours each week for 38 weeks of the year."

So it's 570 hours, you can take it whenever you want.

Except it's not 570 hours. It's 570 multiplied by the hourly rate your LA are prepared to pay. :(

It would be better if the government were a bit clearer about all this.

"So it's 570 hours, you can take it whenever you want. "

No, you can't. AFAIK if the nurseries are audited, they have to say which sessions you attended that qualified. Those sessions have to be within school terms.

So if the weeks you regularly don't go are in school terms, that might prove a problem.

The rules are also clear that the hours have to be free, other than eg meals. However they cannot stop nurseries adjusting their other costs.

If the nursery opts to offer the free hours, it has agreed to do so at the LA's rate, they are not obliged to offer free hours

"AFAIK if the nurseries are audited, they have to say which sessions you attended that qualified. Those sessions have to be within school terms."

www.gov.uk/free-early-education

All 3 and 4-year-olds in England are entitled to 570 hours of free early education or childcare a year. This is often taken as 15 hours each week for 38 weeks of the year.

www.westsussex.gov.uk/idoc.ashx?docid=81ec9341-0cff-4f3a-bac1-9a2e921a14a8&version=-1

Can childcare settings offer the FE over more than 38 weeks? Yes, but the weekly amount is reduced in order not to exceed the 570 hours annual allowance.

www.westsussex.gov.uk/idoc.ashx?docid=a26f28eb-d59f-4f9c-a31f-a6ff10b84d8e&version=-1

Q. What is Flexibility? A. Think of the entitlement as 570 hours and this cannot be exceeded. These hours can be stretched across the whole year dependent on the setting you choose. (Also see the table which gives an example with 51 weeks claimed.)

Ah, thanks.

That same document backs up the point that a free hour should be free.

They can be spread over the full year but they still need to be billed separately so it is clear what is paid for and what isn't

I didn't think they were allowed to bill by just subtracting the funding from the total paid. They can charge more for the extra hours to make it equivalent to the same thing but they can't bill you like that. It's possible that she isn't getting the entitlement. Is your monthly bill £179.07 less than it was before?

The more I look at the numbers, the more I think you are right. Assuming the FT childcare is £1000pcm and you were paying £875 part time, and that they are claiming over 51 weeks not 38:

875pcm for pt hours - the £176.24 they are funded = 698.76.

I don't think they can bill you like that, but that's essentially what they are doing if they top up the rest of the hours to make sure they have the same money in total. What they are essentially doing using the first calculation is taking some of the 15 hrs out of the full time hours you are not using.

I agree, Rafa - now it is clear the OP doesn't get a discount, she simply doesn't pay for weeks she doesn't go but then the balance is spread evenly.

So for whichever weeks she does go, she should get the equivalent of 15 hours x 38 weeks, spread over these weeks, (provided she uses at least 38 weeks)

"now it is clear the OP doesn't get a discount"

The reason for the discount is irrelevant. Whatever the discount was for I should still get the full EY entitlement of 570 hours pa at £3.77pa passed onto me as long as I never drop below 570 hours pa which I never do.

"875pcm for pt hours - the £176.24 they are funded = 698.76."

Exactly. That's what I think they should be doing, but by subtracting the the 12.5pc at the point they do they are pro-rata-ing the EY Entitlement. My question was should they be doing that.