Nurseries charge for free childcare

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Nurseries charging for free childcareNurseries are charging parents for government-funded childcare and reimbursing them at a later date, despite a legal duty to provide care free at the point of delivery, CYP Now has learned.

Currently, all three- and four-year-olds are entitled to 12.5 hours of free childcare every week, but this is set to increase to 15 hours from September.

Parents have begun to complain that they are being charged for free childcare, and refunded only at the end of the month or term.

The issue is causing such concern that childcare charity the Daycare Trust is planning to conduct national research over the summer months to ascertain the extent of the problem.

Anand Shukla, Daycare Trust’s business director, told CYP Now: “When some parents receive money as a deduction from their fees, it does not always cover the cost of the free entitlement.

“Some parents are unclear if they are even receiving the free entitlement, so we need to ensure all parents are aware of it and take-up is as high as possible.”

Statutory guidance accompanying funding for the free entitlement, A Code of Practice on the Provision of Free Nursery Education Places for Three- and Four-Year-Olds, was published in 2006. It clearly states that “providers should not charge parents fees in advance for the free entitlement to be refunded at a later date”.

The new code of practice to accompany the extension of the free entitlement reiterates that up-front fees are prohibited.

“Parents struggling to pay bills will not be able to pay up-front fees,” said Imran Hussain, Child Poverty Action Group’s head of policy.

“Poorer children will be excluded from accessing the free entitlement, which is likely to compound educational inequalities at a later stage.”

Claire Schofield, director of policy for the National Day Nurseries Association, claimed that most nurseries are following the government’s code of practice, suggesting that some may have alternative agreements with their local authority.

“If any setting is following such a process due to cash-flow issues or late payments, they should raise this with their local authority as a matter of urgency,” she added. “There continue to be many issues with the free entitlement, with under-funding a major one, and it is crucial these are resolved.”

Parenta is currently offering nurseries a chance to ease the administrative burden of free entitlement, by offering a money-back guarantee on our Abacus management software this month!

How is your nursery preparing for the administrative changes involved with free entitlement? Do you think it is right that some nurseries are charging parents early for government-funded childcare and reimbursing them at a later date? Leave your comments below to join the discussion!

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13 thoughts on “Nurseries charge for free childcare

  • February 10, 2011 at 10:35 pm
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    l am staggered at the audacity of this goverment, and the local authorities with regard to the delivery of the 15 hours of free nursery care at point of sale. it is not rocket science. NO private nursery can possibly sustain a loss of income that this 15 hours of freee entitlement will cause. If the GOVERMENT has pledged that parents can have 15 hours of free nursery care, then they should pay for it, not private business.
    Its a no brainer, all the above comments are really not getting to the heart of the problem, its not about how the grant is paid, but the amount received not relating to the fees the nursery charges. l see no option but to opt out of this scheme, which is perhaps the goverments intention, look at the money they will save?

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  • October 25, 2010 at 7:31 pm
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    Oh dear Rosemary. You clearly do not run your own day nursery business or you would understand what we as providers are all talking about. You clearly have totally missed the point!!

    To make it simple – we are unhappy that the only way for or customers to receive their ‘free’ entitlement is by us signing a document that effectively will put us out of business!!

    Do you realise what will happen if all nurseries decide to NOT sign the new provider agreements which is what will probably happen this time round?

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  • September 23, 2010 at 10:26 pm
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    We are a small LA Borough and as PVI’s we have campaigned to get the amount we receive for the EYSFF next year raised. 50% of our groups will be worse off than now. Most of us will be loosing thousands from next April. We have been told that because the LA will be our best customers we should give them a discount hence the reason for our basic rate being 30p less than the amount we receive at the moment. We will get supplements on top but most of us will still be loosing large amounts next April. They expect us to pay for EYP’s on ridiculous amounts and even get penalised for even asking as private businesses that we can make a profit. I am open the same amount of hours as a school but could not think of paying a EYP unless I get rid of 2 staff. That way the EYP would have to be at work about 6 in the morning to get everything out and hopefully sprout at least one more set of arms to be able to be in 3 places at once.!!!

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  • August 17, 2010 at 3:32 pm
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    I have a problem with the code of practice that is soon to be enforced and the fact that the government are restricting nurseries from charging ‘top up’ fees, registrations fees and deposits from parents.
    I understand the government wanting to help parents and offer them funding to pay towards nursery fees, but at the end of the day a lot of us are private business trying to survive and provide a service for the parents in our community, the restrictions that government are proposing will mean a lot of nurseries simply wont be able to afford to run as they currently do and will have to look to make cutbacks where possible which will of course end up having an impact on the quality of care given to the children.
    I feel private nurseries should have the right to charge what top ups they need to maintain the care and service they currently provide, in my experience parents have been happy paying the small ‘top up’ fee.
    If parents want/need to only access the 15 funded hours they should attend a maintained nursery that can provide this, in this way parents will have the option to choose a nursery that suits them with regards to accessing the funded hours only, or paying the small ‘top up’ as set out by the nursery.
    All nurseries are different in some way at the end of the day and this flexibility will not be possible under the new code of practice, flexibility needs to be given back to the nurseries as individuals, not trying to make all nurseries unified.

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  • August 16, 2010 at 5:32 pm
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    It seems that I need to clarify my earlier comments.
    If a provider has signed a service level agreement (SLA) with the LA to deliver Nursery Education then that provider has entered into a legal agreement to deliver these hours at no cost to the parents. I agree absolutely that there should be no delay from the LA to pay the provider. However providers do need to be aware that they are breaking their SLA agreement if they charge parents for something they have agreed to deliver free to parents in a legally binding document. It would be wrong of me to suggest otherwise.
    There are three problems. Firstly that the payment to providers is not timely timely; secondly that the payment should does not cover the true cost of delivery and thirdly that the funding for parents comes from too many purses and causes confusion and an administration burden.
    The first problem about times of payment is the easiset to tackle. This is a local issue and the LA’s will already have the money in their bank and have no excuse for delaying payment to the provider. I am sure NDNA will be only to happy to give them the names of the LA’s that already pay up front or in a very reasonable time frame and support them in their campaign.
    As an exmple for you to use:
    In Kirklees we are asked to estimate the number of children and hours of entitlement before the start of the term and this term we will receive an interim payment on September 3rd which is 75% of the total. The other 25% is paid in November along with any adjustments that have to be made. This is an excellent arrangement which means that we receive money into our bank upfront.

    The second problem around levels of funding means convincing a Government that NEG has fallen behind both the rate of inflation in nurseries caused by massive increases in minimum wage/raising quality/recruitment of graduates Level 3’s etc not to mention rises in VAT, business rates and the cost of food and heating. We did not win this argument with the Labour party and I believe it is going to be even harder to win the argument with the Coalition which is hell bent on making cuts to public spending rather then increasing payments to us. The only way this argument can be won is by sustained and effective lobbying both at local and national level. This needs to be done by the organisation that represents you whether it is NDNA, PLA or NCMA. Ideally it should be a coalition of all three. Those of you who battle on alone or in small local groups will never be able to force policy change at national level unless you can be counted in the membership of these organisations.

    The third problem about streamlining funding is of course even harder to win. However if this government streamlines the funding to parents I am sure Mr Cameron will be able to remove even more civil servants from office. The current systems of NEG, tax credits and vouchers is burdensome to providers and unfathomable to parents. Then with the savings he will make in all the departmenst that try to work out these payments he will be able to pay us the proper rate for delivering the high quality education and care that our children deserve.

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  • August 13, 2010 at 6:03 pm
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    Absolutely right on the button! We are carrying the cost for Nursery Education Funding. Our local authority provides us with 50% within the first 6 weeks of the term. The final amount we have to wait to receive until the end of the second headcount – two weeks or so later the payment is received. Our invoicing system is set to send invoices two weeks before they are due, NEF is deducted at source; the same happens for the 3 or 4 months of that term – NEF is deducted at source and we have to wait … the effect is a significant pressure on cash flow, particularly when you add in the fact that there are always parents who either fail to pay or pay late even when NEF has been deducted and that NEF is not an equivalent to our hourly rate for sessional care.

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  • August 13, 2010 at 9:53 am
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    Our LEA has, as directed by central government, prohibited pre-school facilities from charging any kind of ‘top up’ during the free entitlement period. As previous contributors to this thread have pointed out the hourly entitlement does not cover our overheads let alone morning/afternoon snack and cooked lunch/tea!
    Are we providing this out of the goodness of our hearts – I appreciate that the intention is to provide free child care but surely not at the cost of our own charity.
    Your thoughts ……

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  • August 12, 2010 at 5:35 pm
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    There are laudable aims behind free education for all 3 & 4 year olds but the current scheme is unfair and unworkable.
    No nursery can afford to offer free places at the rate paid by the government – it about one third of the going rate required for a private nursery.
    And what happens in the holidays – either the parents have to pay the going rate for the place or, in busy nurseries, the place is taken up by a child on the waiting list and the original child has lost his/her place.
    There are now 3 systems of getting money to parents – Child Benefit, Nursery Vouchers & EYFS – each with its own huge staff that administer it. Surely we only need one system?
    The sooner the government grabs hold of this and sorts it, the better!

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  • August 12, 2010 at 5:15 pm
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    I agree with all of the previous correspondents. When NEG funding was first paid via the LEA we did not get paid until after the “headcount day” for returns which was half way through the term. There was no way that we could reasonably be expected ti give value for the NEG until the funding was paid to us. Apart from anything else you could not be sure until after the headcount day what parents were claiming. Our LEA has done the sensible thing and paid 50% of the previous terms grant up front. Before that I was charging parents until such time as the funding was received. We cannot be expected to behave like a bank giving free overdrafts. Catherine hits the nail on the head by suggesting that the benefit should be means tested to allow the poorest families to get back into work.
    I am surprised at Rosemary Murphy saying that we should provide credit for parents until the funding is received.
    We have not yet agreed a single funding formula with the LEA. I would love to hear from a setting which is in an area where a formula has been put in to practice. How does what you receive compare with the nursery unit of funding? Have VAT, NDR, rent (notional or actual) & utilities been added to the maintained provision costs

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  • August 12, 2010 at 3:15 pm
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    When it all started back in 1997 it was vouchers for pre-school education. It made sense then for it to be in school term time only. Five years into New Labour a strategy of funding childcare to help mothers back to work seemed to take over from the educational aim. Then after another five years the EYFS structure imposed a duty of providing education on just about ALL childcarers outside the child’s own home – 24/7 if that’s what the children were doing! If it were affordable it would be laudable, but it isn’t and so it will fail. Time for a strategic review.

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  • August 12, 2010 at 1:53 pm
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    The principle behind nursery education is that it should always be free to parents and the rules have always been quite explicit.
    I am aware that some Local Authorities have been very slow at reimbursing providers and these providers have great difficulty in carrying the costs. I presume they feel they have been left with no alternative but to charge up front and reimburse parents when the LA finally pays. However they are still breaking the rules and rather than penalising parents they should be making strong representation to the LA and asking NDNA to take their case to the minister. There is no excuse for late payment from the LA’s as the majority can provide a prompt and efficient payment service.
    If however providers are being paid promptly by LA’s then free nursery education should be exactly that and there is no excuse for charging. They are breaking their service agreement.

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  • August 12, 2010 at 1:35 pm
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    our nursery is privately funded. what the government fund towards the 12.5 hours/15 hours is insufficient to cover our equivalent cost of 12.5 hours of care. parents are made aware that we have ours scale of fees and what government funds received will be reimbursed once received from the government and over the last few years we are only paid at the end of the term. i do not agree that nurseries like ourselves should fund the government for what they promised the public. perhaps they should ensure to provide more free places themselves. We all have wages to pay and cashflow are our main issues so we should not be out of pockets for the benefit of the government empty promises.

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  • August 12, 2010 at 1:20 pm
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    Government funding is NOT for every week of the year – it only covers 38 weeks of the year – term times. This begs the question of what is it for?

    If it is to help low paid working mothers, what do they do for the other weeks of the year for childcare? Should it not be targeted at the poor and low paid and for 50 weeks of the year rather than be a universal right?

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