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Cost of childcare vs National Living Wage


JJA
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So just how much are you having to put up your hourly/daily rate to help cover the cost of...

3% minimum wage rise this year PLUS

2% compulsory pension PLUS

7% National Living Wage rise next April???

 

I've think I've done the maths and worked out that to cover just the 7% I need to put up the hourly rate by 19p, so that's an extra £1.90 a day! I can't do that in one hit to the parents, it just wouldn't be fair!

 

What are you doing?

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We're putting ours up by just 50 per session but as the living wage is being forced on us by our Council they have agreed to increase the funding by 27p for now.

Its not set in stone that the increase will remain at 27p but from what I gather it was to prevent some especially vulnerable groups from going bust while costs were looked at.

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Our committee was advised by Treasurer to increase fees by 0.20p an hour at meeting in June but they disagreed and increased them by 0.10p an hour from Sept. This was before the anouncement of the living wage. They won't look at them again until next June so goodness knows what will happen then?

Edited by lsp
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hhmmm I guess it depends on what the fees are already maybe?

 

You've got me thinking now because we were putting ours up 50p per hour from January which will take it to £3.50 per hour.....

Ours are £3.52 per hour now and Im rising them to £3.63 in Jan to fall in line with funding.

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I'd like to offer the suggestion that staff costs are not the make or break for a childcare setting, but rather the cost of the building. Childcare funding is broken down into increments for staff - minimum wage plus costs and training, management costs, resources and operating costs, and a proportion for the building. By providing care on domestic premises as a childminder, I receive the increments for my time and expertise, for my management skills and time, and for the use of my house. So personally, I make a reasonable rate or am able to operate at less than full.

 

In order to run a viable business to accommodate increased funded places, childcare businesses will need to cut the mortgage or rent - take up industrial park type accommodation, or operate within the domestic environment.

 

Subversive? I don't think so.

 

Honey

Edited by HoneyPancakes
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I'd like to offer the suggestion that staff costs are not the make or break for a childcare setting, but rather the cost of the building. Childcare funding is broken down into increments for staff - minimum wage plus costs and training, management costs, resources and operating costs, and a proportion for the building. By providing care on domestic premises as a childminder, I receive the increments for my time and expertise, for my management skills and time, and for the use of my house. So personally, I make a reasonable rate or am able to operate at less than full.

 

In order to run a viable business to accommodate increased funded places, childcare businesses will need to cut the mortgage or rent - take up industrial park type accommodation, or operate within the domestic environment.

 

Subversive? I don't think so.

 

Honey

Not always the case..

I know of many settings that are in rent free premises that are having the financial issues due to the other costs involved, everything else all adds up , and that includes wages , the new pension scheme, sickness pay , insurance etc along with all the day to day costs.

We found it to fluctuate greatly with sometimes running at costs and others at a deficit.. always hoping there would be a term where we could recoup it. We felt a rent of £120 per week not huge , and covered that with fundraising each year.. funding was just for the other running costs and regularly ran out. .

Also with a well qualified staff you would expect to get much more than the living wage.. why should the funding amount not reflect this..

Parents deserve to be offered a choice and it will all end if the funding cannot cover the running coats.

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I'd like to offer the suggestion that staff costs are not the make or break for a childcare setting, but rather the cost of the building. Childcare funding is broken down into increments for staff - minimum wage plus costs and training, management costs, resources and operating costs, and a proportion for the building. By providing care on domestic premises as a childminder, I receive the increments for my time and expertise, for my management skills and time, and for the use of my house. So personally, I make a reasonable rate or am able to operate at less than full.

 

In order to run a viable business to accommodate increased funded places, childcare businesses will need to cut the mortgage or rent - take up industrial park type accommodation, or operate within the domestic environment.

 

Subversive? I don't think so.

 

Honey

Being a bit dim here...not sure that I am getting your point?

Childcare businesses run at around 70% wage costs...this is normal for an education business so any increase in staff costs will be likely to cause financial issues

Rent can be negotiated with the lease holder and as they already own the property it is likely that they are able to be more flexible as they would only be expecting around a 5% return on their investment. They know that by forcing prices up too much it may result in them losing their tenant and therefore they would be out of pocket

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Without going too far down the left wing, who owns the lovely big buildings nurseries and playgroups are set in? Not so often small business or individuals. If there's a more profitable use for those buildings the owners will, logically, have to take it so there is only so much negotiation to be done. To be candid, there's a full-on right-wing conspiracy theory going on in my head - but I'm not convinced it's not valid.

 

The new living wage won't be about increased money in the pockets of families, but reducing tax credits - putting the real cost of staff on to business - supposedly reducing taxes. That seems fair enough but nursery workers won't necessarily be making any more money. Surely this is understood by the financial whizzes managing the economy. Either fees for non-funded children have to increase, or savings made elsewhere - I'd be looking to tax relief to cover some of the increases.

 

I've increased my fees for non-funded places by 60p/h this year. I think I've been realistic about future costs. The risk is that other settings won't and I've out-priced myself. It's going to be a cold hard winter. I've insulated myself and hoping that, come the spring time, the carnivores haven't eaten all the food. IMHO, businesses that can find an advantage, either financial or in flexibility, will survive what's to come. I'm not the competitive type, but I'm preparing for the onslaught.

 

So, the choices I see are either increase fees in line with projected expenses, or reduce costs, and if that means moving to cheaper lodgings, preferably not owned by the... (pinko rant deleted), all the better.

 

Or, become a charity?

 

H (and I'm not really political - just suspicious)

Edited by HoneyPancakes
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We definately don't get anything more as a charity, in fact it's harder to increase fees to cover costs as obviously the people calling the shots don't want the fees to go up ....it's always a battle.

 

We are in the enviable position that staff are already paid above the living wage, but have worked out everyone will need an 18% increase by 2020 ....approx 14k on current staffing costs :-/

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[We are in the enviable position that staff are already paid above the living wage, but have worked out everyone will need an 18% increase by 2020 ....approx 14k on current staffing costs :-/

 

Thats ALOT of money Mousekeeter - cant see how that could be done!?

 

The cynic in me tho thinks that by 2020 Early Years Settings will be a thing of the past! If your a nursery, well, you will survive....as I can't see schools opening their doors to babies - just yet!

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For those that needed a pay rise due to both minimum wage rise & national living it's added an extra 10% onto everyones pay for this year to keep the pay structure for what little it's worth :(

£6000.00 is our amount to be fundraised this year we can't put fees up again as we've already done it for this academic year as stated above - I feel fundraising is the major part of our job now, not childcare :(

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What size is your setting Thumper - number of children and staff?

 

We had an issue last year. Normally wages rise same percentage as min wage to keep pay structure in place but the committee decided assistants on min wage would go up 3% as required but rest of us got 1% !!! Then only raised fees by 10 pence to £3.30 an hour. Anyway they have now put in place a new written wage structure based on min/living wage × 120% etc. Still doesn't address the issue of fees.

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For those that needed a pay rise due to both minimum wage rise & national living it's added an extra 10% onto everyones pay for this year to keep the pay structure for what little it's worth :(

£6000.00 is our amount to be fundraised this year we can't put fees up again as we've already done it for this academic year as stated above - I feel fundraising is the major part of our job now, not childcare :(

And isn't that disgraceful - that fundraising is keeping afloat our funded 'free' 15 hours and DC wants to extend to 30 hours - presumably he thinks thats what we're good at - Fundraising!!

 

Btw thumperrabbit, any tips on how you may do that?? - £6000?? I must be missing a trick here......

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And isn't that disgraceful - that fundraising is keeping afloat our funded 'free' 15 hours and DC wants to extend to 30 hours - presumably he thinks thats what we're good at - Fundraising!!

 

Btw thumperrabbit, any tips on how you may do that?? - £6000?? I must be missing a trick here......

Haven't a clue - lots of cake sales, dress up days, raffles - I've accquired an enthusiastic committee member this time and she's up for the challenge :blink: we do still have reserves from the good ole days plus we never seem to buy anything new these days which is very sad but needs must.

We are a small setting with mainly 2-3yr olds and are supernumeracy by 1 everyday.

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Arrrrrrrgh, because Im being lazy and really not considering 2020, I hadnt worked out my costings for 2020.......promoted by this thread and the fact that X Factor is boring and sooo predictable, I just did!!! £7,700!

 

thumpberrabbit I need those fundraising ideas quick!! - just in case ha ha! : (. Or its definately finito for me.....

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Haven't a clue - lots of cake sales, dress up days, raffles - I've accquired an enthusiastic committee member this time and she's up for the challenge :blink: we do still have reserves from the good ole days plus we never seem to buy anything new these days which is very sad but needs must.

We are a small setting with mainly 2-3yr olds and are supernumeracy by 1 everyday.

Wow, the cakes must be good - or you have generous parents!

 

We too are 1 over ratio but that will have to go - sad eh?

 

And we have no reserves - live day to day here....

 

Think we should gatecrash Question Time!! or at least bombbard our MPs!

 

X Factor just got interesting :/

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you may be right rafa....so don't you think the government are going to give us enough of an increase to make this work :quote]

 

No , to be frank Mousekeeter I do not think he will meet these costs and in the words of Paddy Ashdown "I'll eat my hat" if he does!!

 

I think ratios will rise - re day trip to france..... to begin with, and once chaos has ensued, the next step will be......3s will be admitted into school. Then he will bow out .........(how do you type a raspberry??? )

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NICS cut is worth 2K - so doesn't meet the shortfall plus you now can't claim back statutory sick pay.

 

As well as factoring the living wage and possibly uplift of existing rate differences don't forget that this will impact on auto enrollment for pensions as more people will fall into the auto enrollment category.

 

Just to be a real harbinger of doom - if the 1st aid thingy (see consultation) comes in you will also need to factor in first aid course renewals for all (newly qualified staff) not forgetting that this will mean more NICS contributions, more holiday pay for hours worked, more staff cover costs plus their added NICS and holiday pay!!!!!

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