Northamptonshire County Council in early years funding blunder

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A new IT system has caused havoc for childcare providers in Northamptonshire, leaving more than 80 per cent of them with either overpayments or underpayments for funded places.

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Northamptonshire County Council owes childcare providers more than £120,000 because of administrative errors

  • Third of providers owed money by the council
  • Error blamed on new IT system and admin errors

230-underpaidNorthamptonshire County Council has underpaid 230 providers, including nurseries and childminders.

More than a third of the 622 childcare providers in Northamptonshire are owed money by the council, amounting to a total of £124,845, because of errors in administrating funding payments.

The local authority said the move to paying funding monthly rather than termly in September 2017, when the 30 hours came in, meant ‘errors were made and as a result there were significant inaccuracies in the payment of funds’ (see box for its full statement).

One affected provider, Tom Shea, owner of the Child First Nurseries group of six settings, one of which is based in Northampton, was underpaid £12,000 by the council. Sam Evans, who operates Little Learners Childcare, two nurseries in Northampton, was underpaid by over £7,000. Both providers have now received the money from the council.

However, Mr Shea said he has concerns about its ‘level of competency and logic’.

Another provider, Hayley Hannan of Roade Day Nursery in Northampton, is owed £8,750 by the council and is still awaiting payment.

Northamptonshire County Council, which was declared bankrupt last year, says all providers that are owed money have now been written to and once they confirm that they agree with the figures a lump payment will be made.

295-overpaidIt also claims it has overpaid 295 childcare providers and will be working out ‘the least disruptive repayment scheme for them’.

However, nursery owners have cast doubt on the council’s claims after many were initially told that they owed the council money when it was the other way around.

Ms Hannan told Nursery World, ‘The council invoiced me stating that I owed them around £600 for one term and they owed me roughly £300 for another year. After spending hours going through the figures, including during weekends, we found that they in fact owed me £8,750.

‘The council have promised to pay back the money, but I am still waiting for the payment.’
While the nursery owner says she does not need to rely on funding payments to run her business, she admitted the underpayment has caused a ‘financial strain’.

Sam Evans of Little Learners Childcare was also originally told by the council that she had been overpaid, when it had actually underpaid her between autumn 2017 and spring 2018.
The council’s Overview and Scrutiny Committee is now looking into the issue.

‘Not the first time’

The National Day Nurseries Association (NDNA) said Northamptonshire County Council needs to ensure childcare providers are not incorrectly paid again as the delay in payments ‘risks causing real damage to the sector’.

Chief executive Purnima Tanuku explained, ‘Late payments, for whatever reason, threaten cash flow to providers who still have children to look after, as well as staff and bills to pay.

‘This is not the first time we have seen this in Northamptonshire and those responsible in the council should correct the situation as quickly as possible and ensure that it doesn’t happen again.

‘Childcare providers across England are struggling with chronic underfunding as it is. These payment delays in Northamptonshire risks causing real damage to the sector. Places currently cost almost two pounds an hour more than the Government’s funding rates.

 ‘From April, providers will be under even more pressure with increases in National Living Wage, Minimum Wage and pension contributions which will threaten nursery sustainability.
‘DfE guidance clearly states that local authorities should pay providers on a monthly basis unless all parties agree an alternative method of payment. Councils must adhere to this guidance.’

Statement from the council

A Northamptonshire County Council spokesperson said, ‘In September 2017 a monthly payment system was introduced for early years funded places. This replaced the previous system where a payment was made at the start of each term based on estimated numbers in each setting and then a further balancing payment at the end of each term either providing more money or claiming some back based on actual numbers.

‘During this process errors were made and as a result there were significant inaccuracies in the payment of funds for this period.

'This resulted in underpayments being made to 230 providers totalling £124,845. In addition to these, overpayments were also made to 292 providers.

‘In August 2018, a full recovery plan was introduced to resolve all these issues. Due to the depth of the issues this has taken longer than anticipated.

‘Today all providers who are owed money have been written to with a final amount owed to them by NCC. Once providers receive these, we are asking them to confirm they agree with the figure and once that is received a lump payment for that amount will be made.

‘With regard to providers who were overpaid during this period we will be communicating with them directly and working out the least disruptive repayment scheme for them.

‘If providers respond to us swiftly to confirm they are happy with the figure owed them, this can be processed immediately.’

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