There has been confusion among providers about whether they are able to charge for extras, such as meals, nappies, music lessons and trips, and a call for more guidance from the DfE.
The department has drawn up a model agreement setting out what it expects should be included in agreements between local authorities and early years providers offering the 15-hour and 30-hour childcare entitlements.
These vary between local authorities and the model agreement is intended to provide greater consistency across the country.
The Government has said that the funding providers receive is to cover the cost of free childcare and not consumables or extra services.
Last month early years minister Caroline Dinenage told private nursery owners that they must charge parents for additional services if their viability is threatened by 30 hours funding rates that are less than the fees they charge outside the free entitlement.
In a section on charging – which the DfE expects all local authorities to include in their provider agreements – the model agreement states that ‘Government funding is intended to cover the cost to deliver 15 or 30 hours a week of free, high quality, flexible childcare. It is not intended to cover the cost of meals, consumables, additional hours or additional services.’
It adds that providers can charges for meals and snacks as part of a free entitlement place and also for ‘consumables’, for example, ‘nappies or suncream’, and services, ‘such as trips and yoga’.
However, it states, ‘These charges must be voluntary for the parent. Where parents are unable or unwilling to pay for meals and consumables, providers who choose to offer the free entitlements are responsible for setting their own policy on how to respond, with options including waiving or reducing the cost of meals and snacks or allowing parents to supply their own meals.’
The model agreement, published on Friday, says it aims to ‘bring greater consistency to provider agreements across all local authorities and all types of providers. The department expects the standard headings and wording provided in Section 2 to be used in all provider agreements. Local authorities should then include further detail to set out local level process where indicated.’
The model agreement ‘does not provide guidance on how providers operate their private businesses, including charges for provision over and above a child’s free hours. Local authorities should not intervene where parents choose to purchase additional hours of provision or additional services providing that this does not affect the parent’s ability to take up their child’s free place.’
Section 2, which the DfE says should be used in every provider agreement ‘unless there is good reason not to’ covers: key local authority responsibilities; key provider responsibilities; safeguarding; eligibility; the grace period; flexibility; partnership working; special educational needs and disabilities; social mobility and disadvantage; quality; business planning; charging; funding; compliance; termination and withdrawal of funding; appeals process; and complaints process.
It also includes a sample parent declaration for the free entitlement, an Early years Pupil Premium (EYPP) registration form, and a Disability Access Fund Declaration for three- and four-year-olds who are receiving Disability Living Allowance and are eligible for the Disability Access Fund.
The DfE says that the model agreement, which was developed with providers and local authorities, will be kept under review and amended as necessary.
Early years organisations gave a mixed reaction, welcoming the move to allow nurseries to charge a deposit for offering 30-hour places, but were disappointed about certain aspects, such as no flexibility for nurseries to make mandatory charges. They also warned that in some aspects, the model agreement was open to interpretation by individual local authorities and that and that there could still be confusion.
The National Day Nurseries Association said that the model agreement was ‘unworkable’ and said the DfE must re-think the document.
It said it was disappointed that the department had failed to formalise nurseries’ ability to make mandatory charges for extras such as food to help cover the true cost of 30 hours, and says voluntary charges are unworkable and no way to run a sustainable nursery business.
The sector organisation said that it was advocating mandatory charges to offset the loss-making effects of low hourly rates in many council areas and make 30 hours workable for more childcare providers ahead of planned full roll out in September.
Chief executive Purnima Tanuku said, ‘The principle of a model agreement is a positive step that we called for as a way of ensuring consistency across the country and there are some good elements to it.
‘One welcome move is to allow nurseries to charge a refundable deposit to reserve a 30 hours place.
‘However, we wanted the agreement to give the flexibility for nurseries to make mandatory additional charges for add-ons such as food and sessions such as dance or language classes.
‘The model agreement lets nurseries make these charges but not as a condition of a place. For example, a setting can charge for meals but they must also have a policy for when parents don’t pay charges. DfE suggests allowing packed lunches or waiving or reducing charges for meals.’
She pointed out that parents would be much better off with 30 hours’ funded childcare, which was ‘a big saving’, and tax-free childcare, which is also being introduced.
‘Early implementers trialling 30 hours have found that most parents are more than happy to pay extra charges,' she said. ‘Nurseries can’t be put in a position where additional charges are voluntary. It’s not the way to run a sustainable business.
‘Final hourly rates that are now being confirmed are leaving many nurseries bitterly disappointed and the right statutory guidance and model agreement would be an opportunity to help make 30 hours more achievable.
‘Fears over a shortage of places have already been raised and the lack of additional support for providers in the guidance and agreement could prompt more childcare providers to opt out.
‘Our message to Government is clear. Please revise the model agreement before we run out of time to make 30 hours a success.’
Neil Leitch, chief executive of the Pre-school Learning Alliance, said, ‘We know that inconsistencies between local agreements and a lack of clarity of how providers can and should deliver the free entitlement has been a real issue for the sector, and so we support the principle of a model agreement. We also welcome the news that providers will now be able to charge a deposit for funded places, as this has been raised by many of our members as an area of concern.
‘However, we’re disappointed to see the final agreement still allows for significant variation between local authorities.
'Even with this document, it’s likely that there will still be confusion over what providers can and cannot do when delivering funded provision.
‘We’re also concerned to note that many of the requirements in this agreement, such as local authorities providing ‘a free entitlement place for every eligible child’ in their area, are only possible with sufficient funding – and yet this urgent issue still has not been addressed by government.
‘The same is true of additional charges. While we at the Alliance do believe that such charges should be voluntary for parents – and that we should resist moving towards a two-tier sector, where parents who can’t afford to purchase extras are pushed to the back of the queue – we also recognise that many providers are being left in an impossible situation: an ever-widening funding gap and no way to fill it.
‘The model agreement repeatedly refers to "free" hours and "free" places – but for providers, these places aren’t free, and never have been. If the Government is not willing to admit to parents that what it is actually offering is a subsidy, then it must fund the offer adequately – there is no third option.’
Liz Bayram, chief executive of PACEY, said, 'We're glad the statutory guidance and model agreement has now been published as it gives providers the information they need to better understand how local authorities should administer free early education. Whilst there is still room to improve the agreement further, it at least sets out the assumption all LAs should be administering funding in similar ways. This consistency is something our members have long wished for.
'PACEY has worked hard on behalf of its members to ensure the model agreement supports their and other providers' needs alongside the requirements LAs have and is pleased that a number of concessions, including being able to charge a deposit and to remove the wide variety of requirements imposed by LAs on providers to deliver the free entitlement.
'The focus now has to be on ensuring LAs use this model agreement and, as we move into delivery of 30 hours, supporting the DfE to further update it where experience shows it is still not delivering the clarity providers desperately need.
'There are still a number of areas in the model agreement that allow for significant variation in interpretation and confusion on what is and isn’t allowed, including resolving outstanding issues such as conditionality. We remain concerned over the issue of additional charges. We know that many providers will struggle to offer a truly equitable service to all families when charges for anything in addition to childcare have to be voluntary. We encourage the Government to use the early implementation areas as an opportunity to review how workable this is before full roll out in September.'