Additional charges to free entitlement hours are routinely imposed by nurseries to compensate for low funding rates, but the news that a parent has won his case over top-up fees at one of the UK’s largest nursery groups has given rise to concerns about the potential for similar refunds across the country.
Parent Damian Roche, whose child received 30 hours of free entitlement at Kiddi Caru Market Harborough, has been awarded £1,200 in fee compensation after the Local Government & Social Care Ombudsman found that Leicestershire County Council failed to fulfil its obligation to ensure the 30 hours were delivered free of charge and instead treated the entitlement as an hourly subsidy.
The ombudsman also said, ‘We are concerned that local authorities may not be delivering on the Government’s pledge to parents, so I would urge other councils across the country to check their processes to ensure providers in their area are not making the same errors.’
Pennie Akehurst, former early years and childcare services manager at Derbyshire County Council, said, ‘This kind of news tends to spread like wildfire on social media, so it is highly likely that this outcome will result in more complaints from parents, some of whom may not have had the courage to challenge their bills previously. This could be painful for settings whose billing is not clear or transparent – and it will raise questions about the rigour of the local authority auditing processes.’
The ombudsman has confirmed that a handful of parents have already been in touch with it about the case. However, Kiddi Caru said it has not received any complaints from parents other than Mr Roche. It added that the ‘very complex’ funding system – no longer in place – was inherited from a group acquisition in 2017 and has since been changed.
Payback time?
Some settings have greeted the ruling with trepidation. Sonia Limbrick, a childminder in Kenilworth, Warwickshire, said ‘it is quite scary’, adding she was going to change her invoices to include a ‘sustainability fee’. ‘I’m going to explain even more clearly to new parents that I do accept funded hours if they pay a voluntary top-up, and can’t afford to offer funded hours otherwise,’ she said.
For the eight years she has been doing the job, Ms Limbrick has never charged more than £5 per hour, while currently receiving a Government rate of £4.09 for the 30 hours. ‘I’ve always been aware you are supposed to call the charge voluntary, and I’m going to say it is a voluntary fee for additional costs and sustainability. I have three children and a big mortgage and I can’t afford to operate for £4 per hour,’ she said. She added that she found the situation ‘just unbelievable’, adding, ‘Why should I have to justify £1 an hour to run my business?’
The CEO of an East Midlands nursery group of four settings said, ‘Why do I feel we will be asked to pay back a lot of money? Just another blow for private providers – I can see me making a decision to stop accepting funded [children] in my settings.’
Tops Day Nurseries, which has 31 nurseries, offers at least one totally free place at all its settings, with more free places at settings in deprived areas. Its policy on additional charges – for items such as Forest School and meals – has been vetted by several of the seven councils it operates across. Chief executive Cheryl Hadland said, ‘We anticipated this. We had had complaints from parents in the past [about additional charges].
‘You have to be totally transparent with the parents and say Government is paying £4 an hour, they are advertising it as a free place but it is not free, and this is what you have to do to keep the nursery open.
‘The boundary between calling it a top-up and an additional extra is so fine.’
Different models
Government guidance states that top-up fees – the difference between the setting’s usual fee and the funding received from the local authority – cannot be attached to a free place, but consumables, meals and optional activities can be charged for, as long as these charges are voluntary. In practice this has led to a huge array of different charging models at settings, with some local authorities stricter than others about how the guidance is interpreted.
The Department for Education says its ‘guidance is clear that local authorities are responsible for making sure all eligible children can take up their childcare place free of charge and that providers’ charging policies enable this’, and it is ‘closely monitoring both take-up of places by parents and the capacity and response of providers’.
The ombudsman’s report states that Leicestershire County Council had openly described the free entitlement (FEEE) ‘as a monetary subsidy the nursery is passing onto parents… The nursery charges £4.58 but credits only £3.50 from the council for each free hour provided under the FEEE. The parent pays the balance. A top up.’
It recommended that the council reviewed all fees charged at the Market Harborough nursery since September 2018, instructing it to automatically refund any top-ups charged to any parent at that nursery within three months. It also recommended that the council ‘reviews the arrangements for invoicing and charging at all other providers of the FEEE…to ensure they comply with the law and government guidance’.
While Leicestershire County Council has accepted the recommendation to review charges and transparency of invoices at the Market Harborough nursery, it said that to review charges at all 539 settings in the borough ‘could not be achieved without drawing in very significant resources from other parts of the council’ and has refused to implement this recommendation.
National problem
Minutes from a cabinet meeting held on 5 February say the council ‘does not believe there is a systemic problem of overcharging by nursery providers in Leicestershire but that if an audit were to identify similar issues to the complaint advanced then, the council would, on the basis of the [ombudsman’s] recommendations, potentially have to pay out significant sums… beyond the available grant funding for the FEEE’.
Kiddi Caru, which acquired the Market Harborough nursery as part of a group owned by Leicestershire Nurseries Ltd, said, ‘We would like to apologise to Damian Roche for any stress and anxiety this has caused.
‘We can categorically confirm that the funding methodology highlighted in the ombudsman’s report is not and never has been implemented across the Kiddi Caru network. We have a transparent and clear funding policy, which is funded hours are free at the point of delivery.’
Leicestershire County Council said it was ‘working to follow the [ombudsman’s] recommendations as set out in the cabinet report’ – that is excepting the recommendation to review invoicing and charging at all FEEE providers in the borough – and is also producing updated guidance on additional fees for providers.
The ombudsman said, ‘We have given the council three months to discuss the report and come back to us with its formal response. We will consider that response and decide what – if any – further action we may take once it has been received.’
The sector is united in feeling the root cause of the problem is underfunding. Leicestershire County Council has advised the ombudsman that ‘it is reasonable for the council to expect that issues over disparities between public and private rates of nursery provision and the impact on the FEEE arrangements should be resolved by central Government rather than at a local level’.
Ms Akehurst added, ‘The requirements of the EYFS are clear – we need a highly skilled and qualified workforce if we are truly to make a difference to children’s outcomes. Many providers are trying desperately to meet these requirements, but it just doesn’t stack up against the early education funding rate.
‘Councils have a statutory duty to ensure there are enough places for parents who want them. In places where there is just enough provision or an undersupply of places, just one closure can have a devastating impact on parents. It could then take around two to three years for the local authority to encourage another provider into the area. So local authorities do not want to see provision closing.’
Ms Hadland added that the net impact of having to charge additional fees was that disadvantaged children lose out. ‘Children who are poor are getting less opportunity and less service than children who are better off. The two-tier system was happening already.
‘What this ruling is saying is that people in early years are babysitters and you provide the cheapest possible service. It makes me furious.’
The parent’s view – interview with Damian Roche
‘I have a great deal of sympathy for the fact that nurseries feel that the money they receive from the Government is not sufficient for them to provide the service – and they have my full support in getting further funding from the Government.
‘But although this may be the case, it doesn’t entitle the nursery to overcharge the families that are utilising your services, which is what I believe Kiddi Caru Market Harborough were doing.
‘I raised my first challenge about the lack of breakdown in the invoices in March 2019. Until I twigged that something was amiss, it didn’t really matter that there was no particular breakdown on the invoice. It was only when from one month to the next the costs went up by over 100 per cent that I queried it.
‘It went through two stages of a complaint at Kiddi Caru and two stages of a complaint at the council before I took it to the ombudsman.
‘I had no plan to be a social campaigner, I just felt that we were being overcharged and that £1,000 could be spent elsewhere to the benefit of my children. If Kiddi Caru said “here’s your refund” two years ago, it would have all gone away.’
By Nicole Weinstein
- The ombudsman’s report is at: https://bit.ly/3pNZdlv
