Spoiler alert - I don't have any easy answers to share...
When the 2-year funding is introduced from April 2024, a childminder might care for a 2-year-old child for 15 hours a week who receives a funding rate of £7 or more an hour. The same 2-year-old would then move onto the childminder’s normal hourly rate for any additional hours parents want to buy – and the childminder’s normal hourly rate might be significantly less than the funding rate paid by the local authority.
Similarly, a currently cared-for 2-year old’s parents might not be eligible to receive funding and the childminder might receive an enquiry for a child who will receive the much higher local authority rate of funding for 15 hours a week. They might then find they have a difficult decision to make – do they continue caring for the original child to provide continuity of care or take on the new child at the higher funded rate?
This will, of course, become a bigger question when the 9-month-old funding is introduced from September 2024 – that will be paid for eligible babies by the local authority at rates around £9 or even £10 / hour in some areas.
This, of course, raises another very tricky question – why will one childminder receive £9 / hour from their local authority for a funded 9-month-old while another childminder, for no reason other than their postcode, receive £10 / hour from a different local authority for the same aged child?
Anyway, back to the original dilemma, because that scenario is beyond my understanding and only serves to remind us of the unfairness of the current Government funding system.
Many childminders say they will see the funding as a ‘bonus’ and continue to charge parents their normal hourly rate for additional hours. Others are wondering if they have been undervaluing their service in the past and need to review their current fees.
Of course, this is exacerbated by the fact that when the same 2-year-old turns 3 and receives 3- and 4-year funding from the term after their 3rd birthday, the funding rate drops with a big bump - and over more hours because many 3 and 4- year-olds are eligible for 30 hours funding. For example, some local authorities are still paying their early years providers less than £5 an hour for funded 3- and 4-year-olds.
Let’s not forget, as well, that this is before we look at some of the local authority ‘rules’ around funding which make it incredibly difficult for their providers to ask parents for any extra money towards the funding shortfall. Some local authorities take a more flexible approach at the moment, but we do not know if this will change and many providers state that they feel they are on a 'knife-edge'.
I note that some of the bigger nursery chains have increased their hourly rates significantly recently for all ages of children and I understand that some are looking at a graduated fees policy which will charge parents more when they are buying non-funded hours for younger children and reduce on a sliding scale as the child gets older and nursery staff can have higher ratios. While this might be a useful fees model for some of the bigger group settings, for childminders it raises another consideration – we can usually only care for 3 children under school age.
Let’s look at the figures for a moment and bring this into stark reality - the current funding system could potentially lead to a situation in the future where a childminder is earning £30 / hour for 3 x funded 1-year-olds for 15 hours a week (total £450) while another childminder is earning £15 / hour for 3 x funded 3-year-olds for 15 hours a week (total £225).
This is before the childminder then charges their own fees for any extra non-funded hours the parents want their child to access, because childminder fees across the country are typically lower (in some cases, much lower) than the current local authority funding rates.
When a childminder raised this concern on an early years group recently, some colleagues told her it would be ‘greedy’ to raise her fees to try and balance the figures out, while others quietly wondered what on earth they were going to do.
There isn’t an easy answer. I think every provider must consider their own business model and sustainability and make their own decision that is best for them.
While I don’t have any solutions, I am sitting here raging at an underfunded and hugely unfair funding system that has put us all in this position. We are already losing far too many amazing, well trained, dedicated early years professionals - for some, this is the latest 'last straw' that will lead to even more resignations. I am sure that loss of providers was not an intentional outcome from the Government - they were thinking only of a vote-winning policy for parents - but I fear that it is happening...
Chat soon, Sarah.
Photo: Childcare Choices is a website which parents can access to learn more about the 15 and 30 hours funding, apply for their child to receive the funding and find out if they are eligible for any other benefits towards their childcare.