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Are you missing out on new childcare help?

Hilary Scott looks at the offer of free childcare provision for pre-schoolers and asks how effective it will be…

There was a point, many years ago, when I earned ten pounds a month less than I paid in childcare.

It sounds madness to have effectively worked for less than free, but it was the only way to keep a full-time job, and there was no help with childcare fees. At that point we had two under-fours in full-time nursery. It wasn’t forever; there came a point where they went up to school and the costs reduced (before starting again for two more siblings).
Things have moved on for the better for working parents since then, and our first toddlers are now teens of 18 and 19, off to start university.

While today’s parents of pre-school children have seen successive governments offer various forms of financial schemes for childminding and nursery care, the latest promise of 30 hrs ‘free’ childcare for 3 and 4-year-olds from September has been a painful and complicated mess for parents, councils and providers alike.

Some nurseries have decided not to offer the 30-hours places, mainly because the rate per hour set by the government via local councils has been decided at a lower rate than it costs to run.

The basic rate payable in Northants is £3.80 an hour, and providers cannot ask parents to make up the shortfall.

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Some providers can only offer the 30 hours to children in full-time places, or have opted out completely. This disparity has led to some parents being forced to move their children to a different nursery or childminder.

Apart from the obvious benefit of helping families budget for childcare costs, studies have proved that children who get some form of early years education has developmental benefits. An OECD (Organisation for Economic Co-operation and Development) report, published earlier this year, provides evidence that children who have received high-quality early childhood education experience better outcomes later in life.

On an academic level, they get significantly better scores in international tests at the age of 15. Students who had attended early childhood education for a year or more scored an average of 25 points higher in the Pisa science assessment compared with those who had not – 30 Pisa points is the equivalent of a school year. In countries where the proportion of under-threes in formal education and care is high, there is also less obesity.

England has traditionally been at the bottom of the list of countries that offer state help with childcare, so the doubling of the 15-hours funding has been lauded as an improvement. The provision is, in principle, a good step towards helping parents in work or to be able to go to work after time at home as a full-time parent. But not everyone is eligible, and those in part time or irregular or zero-hours jobs will have to work out how to take advantage of the offer without losing other assistance, like working tax credits.

All families can currently claim up to 15 hours a week of free childcare for 3 and 4-year-old children for 38 weeks (ie, term time only). This can be taken as specific mornings or afternoons or to assist paying towards a fulltime space. But there are already availability shortages for places even for the 15 free hours.

From September 1, an additional 15 hours (so 30 in total over 36 weeks) can be claimed if:

  • Both parents or carers are working (or the sole parent is working in a lone parent family). This can include if the parent or career is on statutory sick leave, maternity, paternity leave or claiming certain benefits.
  • Each parent has a weekly minimum income equivalent to 16 hours at national minimum wage or living wage; (parents do not necessarily need to actually work 16 hours a week, but rather their earnings must reflect at least 16 hours of work at national minimum wage or national living wage, which is £107 a week at the current national minimum wage rate)
  • Neither parent has an income of more than £100,000 per year.
  • Both parents or carers live in England

If unemployed, both parents must become employed within 14 days of applying.
The parents and the providers have to sign an agreement and the providers claim the money via local councils, who in turn are funded by central government. Parents have to reconfirm their eligibility every three months.

For those who are able to find a place, which can be shared between up to three different childcare providers, the savings can be several thousand pounds a year.
So why aren’t all the nursery providers in the country signing up to provide places, maybe even expanding their businesses and hiring more staff?

The short answer is that they can’t afford to because, as mentioned earlier, the cost per hour offered by the ‘free’ scheme is less that it actually costs to provide.
So, for example, if a nursery or childminder charged £5 per hour, they would be losing £1.20 per hour on that place. That shortfall cannot be requested from the parents, and would have to be borne by the nursery.

So here’s the maths: if a 30 hour ‘free’ place were offered, the nursery or childminder would get £114 a week from government to pay for it. But the place actually costs £150 to provide. That’s a deficit of £36 a week for one place that has to be found by the provider. Multiply that by the number of spaces offered and that’s a considerable loss to the nursery, which is a business that has to pay for staffing and overheads. Many who previously did not charge for meals, classes and excursions are now having to pass these costs on to the parents or stop providing them at all.

Most nurseries do not make much profit and have seen costs increased for minimum wage and pension provision. I know this personally as I volunteer as Committee Chairman at a charity nursery, ranked as Outstanding by Ofsted, in Northampton. No one is making money out of running an independent childcare nursery, I can assure you.
Places were already in short supply before the new scheme was even rolled out: A Family and Childcare Trust survey found 159 local councils did not have enough places in 2016.

From salary sacrifice vouchers to childcare tax credits, the claim processes for parents are never straightforward. And in the last month, HMRC has announced it will be paying compensation for those unable to register with its Childcare Service website for tax-free childcare and the 30-hours, due to technical glitches since its launch in April.

A campaign by childcare providers called ‘Champagne Nurseries, Lemonade Funding,’ has been widely shared online, with a campaign website featuring an easy to understand video explainer (see champagnenurseries.co.uk). They continue to petition the government to appropriately fund the scheme. Northamptonshire County Council’s Early Years department has been working flat-out to try and make sure the systems locally are up and running in time for the September launch. But there are still major issues – some providers and parents have reported they still haven’t received registration numbers as the deadline loomed.

A spokesman for the council confirmed that the basic funded rate for providers in Northamptonshire is £3.80 but added that average they expected to pay was £4.08, if they were eligible for a range of supplements, as well as further funding for additional needs children.

The spokesman said: “We recognise that funding rates for providers are challenging, however our funding rates are based on the money we receive from central government. Despite a reduction in funding for Northamptonshire from the Department for Education, we have been able to increase the basic rate we pay providers by 35p per hour over the past three years.

“We have already had more than 170 providers sign up to provide the additional free childcare hours as part of this government scheme and only one has indicated that they will not be taking part.”

You may be thinking: ‘But I don’t have kids, or ones this age, so why does the issue even affect me?’

In the long term, the provision of quality, affordable childcare is essential to the future prosperity of the country, with children equipped to cope with adult life and employment, which in turn will feed the economy and allow the state to support the pressing issues or social care and pensions. So in the words of Whitney, I believe the children are our future, and we have to get early years childcare functioning well, as it may be what allows us some dignity in our older years . . .

You can find out more about the 30-hours funding via the early years section of Northants County Council’s website, Northamptonshire.gov.uk or via the Childcare Services website at Gov.uk
Are you affected by the changes in childcare funding?
Let us know.

Case Study: free childcare offer led to nursery switch

Helen and George McIntyre

Helen and George McIntyre

Helen McIntyre from Daventry is a parent who has taken the tough decision to move her son to a different nursery due to the chaos of the 30 hours provision.  She and her husband are both self-employed and need to keep a tighter rein on the family’s budget.

She said: “I work as a team leader for Usborne Books (selling children’s books & working with schools & nurseries) and also take on freelance work in buying/marketing/social media.

“I have just one son in nursery, George, who is 3, plus a teenage stepson. We were quite sad at having to move George to a new nursery as he had been at his old nursery since he was 6 months old and was settled there, had friends, knew the staff and the routine.
“However as both my husband and I are self-employed, we had to think about costs and how we could best save some money, as I only left full-time, employed work in March which meant a loss of regular salary.

“My son had been attending a nursery in Daventry for 3 years, however they confirmed at the end of May that they would not be offering the 30 free hours from Sept, as they could not afford to fund it.
“We heard that another nursery in close proximity would be, it was also Outstanding OFSTED rated, so we went to look round it and it seemed a no brainer to move our son as we would save a large amount of money.”

Helen said that the family’s original nursery later said they had reconsidered, and would offer the 30 free hours after all, but they still didn’t know at that point how they were going to afford it and what the terms & conditions would be. So the McIntyres stuck with the decision to move their son.

“As it turned out, the original nursery can only offer the 30 free hours to children attending full time (ie 50 hours a week Mon-Fri 8am-6pm),” she explained. “So although 30 hours are free, you have to pay for another 20 to get the full free entitlement. If you attend fewer hours/days than this, your free allowance is only pro-rata. So, for us only doing 3 days (ie 30 hours), we would only get 18 hours free. The new nursery we have moved to allow us just to do the free 30 hours and attend 3 days.

“Most nurseries in our local area (Daventry) do seem to be offering the 30 free hours, but many have additional provisos around the amount of hours you need to attend to get them, or have introduced additional costs for food or supplies as they’re not allowed to charge a top up fee.”

Despite all the difficulties and paperwork, the potential savings of the 30-hours childcare for working parents are too big to be ignored: around £4,000 a year for the full allocation on top of the allowances already claimed.

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1 Comment on Are you missing out on new childcare help?

  1. sandra green // August 31, 2017 at 8:24 am // Reply

    A very comprehensive and easy to understand piece Hilary. It is now crystal clear. Thanks

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