Free Early Years Entitlement (FEEE)

Free Early Years Entitlement (FEEE)

by: Peckham Princess - 12-02-13 09:35

Hi everyone,

I'm in the process of starting a children's day nursery business (a Montessori), and am currently drilling down on all the figures so I can be as accurate with my projections as possible. I've researched all the competitors in my local area and (as expected) all offer the FEEE (i.e. the 15 hours free provision per week that every 3 and 4 year-old - and soon to be 2 year-old also, is entitled to). However, I wanted to ask a question to the nursery managers and owners out there. If your fees basically work out as £6 per hour (depending on the age range), how do you reconcile what the local authority gives to "pay" for those free hours. In my local authority, last time I checked it was £3.70 per hour. I know there are things that can help e.g. a minimum attendance of 2 days per week, reducing monthly fees so that the "discount" is spread over 12 months, but I'm struggling to see how businesses can carry on (...and don't get my started about business rates!).

Any insights that anyone might have would be hugely appreciated.

Thanks so much

by: bagpuss

Hi If your fee's are £6/hr you are charging £240 per week?  Any way you cannot in anyway bump up NEG grants or show there worth to parents.  You accept them or you don't.  I'm in the North West my hourly rate is £3.75 my grant rate is £3.57 and we run at a loss with them, so I keep no's down and encourage full paying babies and toddlers as much as poss.  However you find parents paying for additional hours and during holidays bump up your turnover.

by: Peckham Princess

Thank you so much Bagpuss. RE our fees, I have a pricing matrix, with a different price for different age groups of children (reflecting the staffing ratios), and also it is cheaper for those children attending more days per week (as an incentive of some sort). For example, for the 3-5 year-olds, we are charging £55 per day for a 10.5 hour day (07:30hrs - 18:00hrs). That works out at £5.20 per hour for those children - which admittedly is closer to the £3.70 per hour grant.

When you say you keep numbers down, does that mean you say you can only offer the grant for x number of children in the nursery? Do you find that still encourages parents through the door, even if they are on a waiting list to get the grant whilst attending your nursery? Do you find this affects your numbers?

And you are right - the grant is only for 38 weeks of the year and we will be open for 50 weeks of the year (closed 1 week at Christmas and there are 5 Bank Holidays dotted throughout the year too). Do you find that makes up the difference enough for you to make a business? I'm not in it to make millions, but I want to be able to survive!

Thanks again Bagpuss

by: bagpuss

I keep grant funded children to a limit or your literally end up broke in the holidays unless you run holiday clubs which most nurseries do.

I believe limited company books through companies house are public property why don't you take a look if its possible?  Your wages are the biggest expense followed by your rent/loan and utilities.  Don't forget to allow for PAYE its a killer and covering holidays and sickness. 

by: Peckham Princess

Hi Bagpuss,

Apologies if I'm being slow, but what did you mean by "limited company books through companies house are public property"?

Yes I know re PAYE - it is sobering doing all the figures! I was hoping to always be above the minimum ratios if the figures work out, as I think there will always be someone sick, on holiday, on training, needing to go to the dentist etc, and as contract staff are very expensive (and in my personal experience, not that effective - sometimes through no fault of their own e.g. not knowing the children/routines), I think this is a more-cost-effective way to do it, and can be a marketing opportunity for us also.

Thanks again

by: kaz (the first one!)

Funded fees do not cover preschool fees either so the non-funded pay a slighly higher rate, for example, our funded 3's are £3.85 (with EYP, postcode and flexibility added) so we charge £4.00 per hour to non-funded. You cannot top up the funded fees in any way so I calculate my fees income on the lowest level only.

by: Maureen Askew

Hi It would be wise for anyone starting a new provision to include the auto enrolment workplace pension payments of 3% of your salaries bill as you will have to start paying. The number of employees you have will dictate the date you legally have to implement the scheme. You can check on the pension regulator website. RTI (PAYE) also becomes in in April. all of which will impact on your bottom line

by: Eejay

"Any way you cannot in anyway bump up NEG grants or show there worth to parents."

I worked out fees for one child, and then got a lecture off someone else in the setting about how I'd done it wrong. Apparently, they "don't do it like that because the funding is less than that amount and doesn't come straight away" - so they charge the full amount until the funding comes through, and then they refund the exact amount they receive. I tried to explain that that wasn't fair at all as it meant that the child wouldn't be getting the full 15 hours and it was the setting that had to make up the difference - but no, it was me who was "wrong"!

by: Peckham Princess

Hmmm, Eejay I think you were right - the 15 hours free provision (for my local authority anyway) has to be free at the point of delivery. Therefore we could not charge parents the usual fees and then refund them the grant for the 15 hours after the child has attended those 15 hours.....

by: kaz (the first one!)

Peckham Princess is right, We are not even supposed to give the funded parents an invoice (which I do although it says £0.00 to pay.)

We are not allowed to charge parents and then refund when funding comes in. We also have a 'win some, lose some' local funding policy so if a child comes adter headcount day, we still have to offer a free place (and suffer the cost) - but also we do not refund the fees to county of a chidl leaves before the end of their funding.