Is my nursery overcharging?

[CSphere]

Hi,

First post to mumsnet, sorry if this is going over a well worn topic (which Im sure it is), but Im looking for some opinion on whether the way m nursery is implementing the free hours is correct.

Firstly, Im not wanting to diddle the nursery out of money, and I appreciate that the amount the council pay my nursery per hour is less than they charge, so although you should get a certain amount of "hours" free, Im happy to consider this difference in money and make allowance for the nursery on that side, its a nice place and I wouldn't want to see them suffer due to making a loss on these hours.

That being said, my simple maths seems to suggest they are buring the candle at both ends.

The standard day is 10 hours. The cost for a day is £47 fully inclusive of meals. I make that £4.70 an hour.

I note from the councils publications they pay the providers £3.92 an hour.

The 15 hours a week for term times is allowed to be spread over the full year, so they give 11 hours per week. My daughter attends 3 days a week.

For the month of September the nursery is charging for 12 days. (4 weeks @ 3 days).

At full price that would be 12 days at £47 = £564.

If the nursery deducted a straight 44 hours, disregarding the difference between what the council pay and what their usual rate is, then they would be deducting 11 hours x £4.70 = £206.80, so the final invoice should be something like:

Full price: £564
less 11 hours @ 4.70 (£206.80)
Total: £357.20

Even allowing for the nursery to deduct from the invoice just what the council pay them (meaning Im paying the top up to the standard rate), I would expect the invoice to be:

Full price: £564
less 11 hours @ 3.92 (£172.48)
Total: £391.52

However, in actual fact, the invoice is £446.33

Can somebody help here? Am I going terribly wrong in my maths, or are the nursery actually burning the candle at both ends here?

Many thanks for any help or advice.

Be thankful you are getting any reduction at all. Our nursery has decided to only offer the 'free' hours in the afternoon as long as people pay full price in the morning (which happens to be £11 and hour!!). To be fair, they were losing money under the old system of allowing 15 totally free hours.
I hope you get a decent answer from the nursery - they should be able to tell you exactly how they have calculated it. However, the 30 free hours is a complete joke with the current government hourly amount, so no nursery will be able to make money unless they find they find other ways of getting extra money out of you. Nurseries are having to get creative... Doesn't mean they are doing anything illegal - they can charge what they want if people are prepared to pay for it.

Although they can keep things simple by including food and extras in the rate when you are self funding the funded hours won't include them.

You need them to tell you how much they charge for food for funded children and if the funded hours are particular ones in the day and if hours outside of those are higher than the average.

Although you are simplifying the daily rate into a 'per hour' rate it may not be that all hours are charged equally, those outside of (for example) 9am-3pm might be a higher hourly change.

Try doing £611-(wraparound+food). Then ÷30 and x19.

I think...

They dont/wont/cant split out the food costs though.

Ive played with figures until Im crosseyed, so look forward to their response when it comes, as I think its the only way that all will be revealed.

The nuts and bolts are that my funding hours, multiplied by the rate the council provide, plus my invoice cost is more than the standard non funded rate.

Ive tried splitting out various hours of the day, splitting out an item for food, charging different rates for different hours, and alas its to no success.

Though to pick up on the point from EnidBlyton1 above, I do know that nurserys offering funded places cannot make them available on condition that you take other hours or extras. This most certainly is in breach of the councils agreement.

Whilst they can be creative and offer funded sessions as small as 2.5 hours, they cannot stipulate that these are only available if you take food or extra hours etc. If they offer funded places they MUST offer the ability to take just those hours. Obviously if they are inconvenient and you want to add other hours, then they can charge what they want for those hours, but what they cant do is charge different hourly rates for funded places to non funded places - thats cooking the books to defraud the system and or parents.

I feel for the nurserys struggling to make ends meet with this system, and thats why Im not against a "top up", so parents bridge the gap between what the council pay and what the places usual charge is.

However if, as I think may be happenening here, the nursery is using clever or artificial accounting to actually make extra money from funded places when it should be going to the parent in the form of a discount, then thats not on. It disadvantages the smaller nurseries that are doing things by the book and struggling.

You've got me interested now in how they explain this to you.

When I used a nursery, well before the current rules, there was smoke and mirrors too about how the free hours were calculated and it was complicated by the fact that you couldn't take more than 2.5 hours of free places per session per day (I think it was that).

I don't believe that there are any kind of rules that say they aren't allowed to tell you how the costs are made up unless they are internal to their company.

I would be little wary of reporting to Ofsted or the local authority, I'm not saying it's right but if the nursery chain can only afford to keep going by charging the way it does an investigation could be disasterous.

As others have said it's not the nursery's fault that they are underfunded

My understanding is however many hours you do per week if you are doing them over only 3 days then you get 3/5 of the 15 hours ie. only 9 hours.

9 x 38 weeks = 342 hours divided by 12 (if spreading them monthly) = 28.5 hours a month.

£47 x 12 = £564
3.92 x 28.5 = 111.72

564 - 111.72 = £452.28

I think they should be charging you £452.28 for September.

Looking at their accounts, they are more than keeping their head aove water. Seven figure pre tax profits per annum.

There are clauses within the agreement with the local authority that specifically state they SHOULD break these charges down for me.

It would appear that the invoice I am presented with and by nor providing the information Im requesting they are clearly at odds with conditions in the agreement with the Council.

See Attached.

This sounds interesting and I'm looking forward to seeing if they give you an answer (I would guess they will continue to try and fob you off!)

So you are looking for a new nursery then? Because whatever the outcome I doubt you'll be welcome at this one again...

The council rules are one thing but in practice they are not followed. I was annoyed but then decided that the nursery was nice and therefore I decided not to pursue it!

Allthebestnamesareused - while that might be how your LEA has chosen to implement the funded hour scheme, that is not a statutory requirement. My LEA not not restrict parents' usage of their free hours in this way (I administer the funding for our preschool, so I've read the guidance).

If the nursery decided to make me unwelcome in the (hopefully very unlikely) event I discover they are defrauding the parents, then I doubt I'd be the only one leaving. Indeed there would be a case to have them struck off the list and the entire company shut down. It's owners almost certainly imprisoned. Hence why I think it is incredibly unlikely they are doing anything dodgy. Though not being able to readily explain their workings leads me to think they are doing the sums at the very least "creatively".

Everything coucil sets its own rate and agreement with the participating providers. Every nursery will also set, individually, how they will make it work to keep their company afloat.

I think you should understand that you will not be able to get a clear answer on this thread as every single nursery and childminder has to make it work and figure out how to bill parents in a way that will keep their services going.

As a childminder, working on my own, even if I had only one child on the 'free' (subsidized is a better word) I would be set to see my small company losing more than £2000 per year, compared to not offering it. And my fees are lower than other providers in my local area.

If you extrapolate that to a nursery, who has to pay staff, their pension contributions, training, insurance, rent, utilities, toys, and everything else, a great many providers will be forced to close down within a year. .
I completely understand that you need to find out how they calculate their fees, but please don't set yourself up with accusing them to be defrauding parents. They are simply trying to survive and to pay their staff.

And your calculations are not using the correct rationale. Nurseries cannot charge the difference between their usual fees and what the council gives them; that is not legal. But they are charging for other extras, food, outings, craft materials, administration fees.

I find it very sinister that people accuse childcare providers to 'fob off' parents. If you only knew how little money we make...

You haven't mentioned (at all) the care your DD is receiving. Your priority apparently seems to be making the numbers work, accepting that your bill has reduced by £100+ but wanting a bigger reduction.

I absolutely get wanting to understand how you're being charged, but in my experience (having used 3 nurseries) they all do it differently but in a way that means they can offer funded hours without making a loss. I think it's highly unlikely they're making a profit out of you.

But the key is whether your daughter likes nursery and is being well cared for. If nurseries are forced to toe the line completely and make a loss on funded places (there is no doubt that nurseries do not receive proper funding from LAs) then the knock on effect is that funded places will be withdrawn and you'll pay the full rate.

Under the 15 hours scheme, you are entitled to 570 'free' hours per year, if that helps. That's 47.5 hours per month (they are probably working by calendar months).

To be honest though you are lucky to have found a childcare provider who will offer the 'free' hours, as the funding doesn't even cover their costs, so you should probably be tactful while asking about this as your situation could be a lot less favourable elsewhere. You sound almost keen to find evidence of wrongdoing! It's much more likely that they just haven't explained it clearly, or that you're not getting something. Do they have a fees chart showing how much you would pay in different circumstances?

If all the posts in the thread had been read, then you would know about the charts used by the managers to try and explain the charges.

I am not seeking to gain a further reduction, I am simply seeking clarification on why the costs do not match my expectations from the 15 hours free.

As I have said several times (had a few posters taken the time to read the thread), I do not wish for the company to lose money on the deal. If they are being creative in order to ensure that between my payment and the council funding they are still receiving the same amount as before my daughter was eligible for the 15 hours, then I'm fine with that.

If however they are being creative to the extent they are now getting more money than they were before her place became subsidised, then surely that's not on. It would not only be somewhat defrauding me, but also incredibly unfair to placements that are playing strictly by the rules.

I must disagree with our last point OP.
Our nursery is now gaining more from each child, despite the change in funding rules. This is because they were losing money before and would have ended up closing if they hadn't found a way to charge more.
There is absolutely nothing wrong with this! If parents don't like the charges they can take their children elsewhere. It's not dishonest.

To reply to your earlier point, ours is a nursery attached to a private school and they absolutely can chose to offer free hours only in the afternoon to children who have paid for the morning. All the local private schools operate the same way.

Then I must assume your local authority places no restrictions on providers attaching conditions to the free hours. See the terms I posted from my local authority which prohibits providers from putting any conditional access on the free hours.

What I mean by gaining from the system is making more from a funded place than from that same place unfunded.

I.e. the 3 day week is £611 per month if paid for privately without any funding at all. This rate is clearly set at a level where they are turning a profit as they are fully in control of it.

Now that we receive the 15 hours funding, then as long as the nursery is still getting that same £611, then I think that's fair.

If they are using the funds from the council to increase their income rather than reduce the parents bill, then surely that must be considered abuse of the system.

Hi OP, yes, you've mentioned the charts but you haven't shown them. It's quite possible that they explain something that you have missed.

I really don't think your manner is doing you any favours -- whether or not you intend it this way, it may be helpful to know that you come across as a bit aggressive in your fault-finding. I think it is much more likely that this is a case of misunderstanding than fraud, and I suspect that going into these conversations with the manner that you have on here would be getting people's backs up.

One thing does strike me from what you've mentioned above:

1. "Im paying for a remaining 15 hours, food, early drop off and late pickup provision."

1. "So it appears they are making £258.40 a year more from a funded place than a non funded place."

Do you not think that the 'missing' £258.40 per annum could be explained by your added extras (possibly just the early drop off and late pick up provision)? It seems like a relatively small amount of money.

I think the problem here is that you are expecting the 'free' hours to be taken off your bill as a percentage of what you're already paying, whereas in fact they are being taken off AFTER added extras have been subtracted, and you need to take those added extras out of the equation first.

Also, re the 15 hours, this just includes the actual hours of childcare. Charges for meals and other extras can perfectly legitimately be applied on top of this. Which have some pages on this: www.which.co.uk/consumer-rights/advice/what-do-i-need-to-do-to-claim-15-hours-free-childcare (includes mentioning that if you're still unclear on how fees are calculated, after talking to the childcare provider, you should contact your local authority for advice).

Don't forget the admin headache of applying for and getting the funding (in arrears presumably). So there may be an "admin" cost too.

Honestly I went through a similar thought process to you, feeling it wasn't fair. But at the end of the day is the nursery the right nursery for your child? If it is then threatening to involve the council won't help your child. After all the council are probably aware of the general practice but ignore it because otherwise there would be no subsidised places available at all. Pay or go elsewhere, it is a free market.

I think it is another shitty government policy that probably costs more to run than the benefit it provides. But that is a whole other rant about government interference / incompetence!

Sure, but clearly nobody is forcing you to take the extra early drop off and late pick up. You want them! So this is an extra charge that you are willingly paying.

Also please check that the LA guidance to which you are referring is definitely regarding the 15 hours available to 3-4 year olds. There are also funding schemes in some LAs for low-income families with children aged 2 and up. The guidance re additional charges could relate to this scheme rather than the main 3-4 year old scheme, which as far as I am aware is allowed to be 'topped up' with no restrictions re the national guidance.

Notmypenguin,

The reason I may be coming across as a bit off in my latest posts here is because it seems those responding lately haven't bothered to read the whole thread, causing the need to repeat information already provided several times. Including my satisfaction with the provision, no desire to leave or screw over the provider etc.

I cannot post the charts as they did not provide them to me, simply whipped out a laminated a4 sheet with simple columns showing how much they charge per week for a funded or unfunded place for varying numbers of days per week.

The funding levels from the council as per the document I posted up refer to the standard 15 hours provision, the extra levels and conditions applicable to those are detailed later in the document.

In short my only concern is that the provider appears on the face of the figures to be using the L.A. funding to part increase their margin than pass it all on as a reduction to the parent.

With reference to the "extras" such as early drop off late pick up etc. These are all included in the daily rate (unfunded) of £47. There is also no option not to have these as a standard day is from 8 to 6.

An unfunded place costs £47 per day. £611 per month. This is what I have been paying up until now. No problem with this.

Now that the funding has kicked in, as long as my bill is reduced by the same amount that the council are giving the nursery then I have no problem.

I appreciate that "top ups" are not allowed, but if they are fudging the figures to generate a top up to ensure they still get that same £611 per month then again I'm fine with that as I don't believe it is fair that they should take a reduction in income due to this government policy.

CSphere, I completely get you.

I have had this issue in the past and I pulled my DC out of the nursery.

Contractually the day rate included meals, snacks, Nappies/toiletries, wellies, suncream, sun hat, waterproof clothing for out door wear a French lesson and dance lesson weekly.

Funding and day rate was the same for us too, the first invoice when funding kicked in had the correct day rate, the correct amount of funding deducted and then "additional costs and fees" on top of funded hours, which funnily enough equated to the exact difference between usual hourly rate and government hourly rate.

I asked for a breakdown of what this additional was, and they couldn't respond, it also transpired that French and dance classes where not even in place any way. So I was really confused to what I was paying for.

I complained to the local authority, who ageeed it did seem like an not allowed top up charge, but they eventually sided with the nursery, for reasons I still don't understand...

However most LAs turn a blind eye to top ups, as there is a real conflict of interest. They are held accountable by the government to have enough funded places, and the only peers they have to stop top up payments, is to remove funding from the nursery.

It's a truely bonkers system. I am sure £3.92 on a £4.70 a day much be at least at cost, ok so not profit, so you increase the rates slightly overall to recoup. If you did that by a few pence on all "rooms" within the nursery surely that would work? And in fact preschool is often more expensive than the other rooms, despite the higher ratio of staff and children.

I know there are some nurseries out their suffering with funding, bad debt etc etc. But from my experience there are a lot of nurseries that are just mismanaged, and a small subset that are a bit greedy.

Speak to other parents, in these circumstances you need lots of voices considering the LAs stance. And look for other nurseries.

We found a fantastic nursery offering 10.5 hour days, level 3 qualified staff and above only (most have degrees, and they minimum wage is 18k) with chickens in the garden and specially designed building, the rooms are alsways over staffed to avoid the need for agency workers, actual restaurant experienced chef and a qualified child dietitian designing the menus, plus French, dance, a monthly school trip and forest school with trips out weekly. It's £10 a day more expensive than the old nursery on paper but has worked out cheeper because they fairly deduct the funded hours.

You might find this article interesting. amp.theguardian.com/education/2017/aug/27/uk-nurseries-30-hours-free-childcare-parents-providers-think-again