How we’re Making the 30 Hours Free Childcare Add Up
“We have not had a single parent across the group who has refused to pay the additional service charge.”
- by Sarah Steel
There has been so much discussion in the trade press – and the wider press – about the 30 hours funding offer, and it has certainly caused some difficulties across the sector. However, many providers are just getting on with it, despite the doom and gloom that heralded the new policy.
That is absolutely not to let the government off the hook. This is an underfunded, misrepresented attempt to appeal to middle England, and actually undoes a lot of the good endeavours of previous administrations to improve outcomes for young children.
Nearly everyone is given less funding per hour than they would charge a customer who walked in the door without funding – this leaves a hole in nursery budgets and may well lead to higher charges for younger children or limit the number of ‘funded-only’ places settings offer.
In some instances, providers are finding such high demand for three- and four-year-old 30 hours places that they are offering fewer two-year-old places.
As we seem to have spent the last few years being encouraged to offer more two-year-old places, this seems rather backward.
Charging for extras
At The Old Station Nursery we looked very carefully at our business models and decided that the only way to ensure financial viability was (obviously) to make sure we didn’t lose money on the 30 hours offer.
We are offering the 30 hours as 3 x 10-hour days, and parents pay an additional service charge for meals and extra-curricular activities, which miraculously makes up the gap between what we would normally charge parents for a 10-hour day and what the local authority actually pays us.
Given that Oxfordshire (£4.01) and Gloucestershire (£3.90) offer some of the lowest hourly rates around, this means that the additional service charge can range from £5 per day to over £20 per day, depending on the fee structure of each nursery.
Generally, parents have been keen to understand the issues around the funding, and they have all seen a significant reduction in their childcare bill, so that has been very popular.
It is a task of educating parents, and I’m sure some of our managers are blue in the face from explaining how it all works, but parents do seem pleased that it is transparent.
The local authority teams have emphasised the importance of clarity and want all parents to know exactly what they are expected to pay before a child starts a funded place.
We haven’t had a single parent across the group who has refused to pay the additional service charge, and mums and dads do always have the right to go and try and find a funded place that is entirely free if they choose to.
Staying flexible
We have had to be a bit flexible: where we have felt that there is a genuine need for multiples of five-hour sessions, we have let parents access the funding in this way but only for a limited number of sessions, as it can block full-day sessions. It’s a case of finding the way that works best for parents without us losing out financially. Parents have been really pleased, but they have also understood that they can’t ‘pick and mix’.
Recently, a mum came bouncing into the office in one of our nurseries and said she would like a complete mix of hours, including several 9am till 2pm days, and was rather surprised when the nursery manager said no!
However, when the manager explained that we had 28 places in our preschool and nearly 60 children accessing various funded hours, she could see that all those children would not be catered for if everyone had a variety of hours to suit the individual family.
Increasing pressures
So, private day care has the ability to set its fees according to the market and parents’ willingness to pay.
I do, however, worry that we are creating a two-tier system, as those on the lowest incomes (even whilst qualifying for the 30 hours), are going to be least able to pay the additional charges that are needed for settings to balance their books.
We certainly could not run a preschool that operated on only funded hours without making any additional charges.
Of course, it is not essential to have extra-curricular activities, such as languages, yoga or music, but it is essential to have well-trained and reasonably paid staff who are able to keep up to date with sector developments.
It is also important to reinvest in the environment, and at rates around the £4 mark, this is impossible without any extra income.
With hourly rates frozen for the next couple of years, and the increases in the National Living Wage and pension contributions in April, the pressure on settings to deliver the funded hours will increase.
As the base rate is not going up, the additional services charge will need to increase to cover the cost of the shortfall, and as providers we will have to make sure parents are aware of the challenges we face.
There is also definite wage inflation in the areas we operate in, which is great for practitioners but challenging for employers. Childcare is not a charity, and in the same way parents pay their mortgage and for their car, they have to be prepared to pay for high-quality early education – and we should never apologise for it.
Plan your strategy
Five steps to 30 hours success…
- Make sure you know what hourly rate you need to achieve to be sustainable.
- Balance the hourly base rate with this and work out what your additional services charge needs to be. Don’t forget the DfE has said that the funding isn’t supposed to cover food or extra activities.
- Be confident with parents. Whilst the DfE says that any charges must be voluntary, you do not have to offer a place to anyone. Your model of hours and charges might not suit everyone, but you can only make the offer; it is up to them to take it or leave it.
- Talk to your parents. Most are very reasonable people, and a simple lesson in nursery economics will have them much more onside than if you just try to bamboozle them.
- Review your management accounts regularly so you really understand how the funding is affecting your business, and tweak accordingly.
Sarah Steel is managing director of the Old Station Nursery.
