Count to ten...

Parents of three- and four-year-olds in England will be waking up on the 1 September looking forward to the start of the Government’s newest financial incentive to help working parents with the cost of childcare: 30 hours ‘free’ childcare.

This is the latest in a long line of childcare initiatives they have introduced; so many in fact that there is now a new government website www.childcarechoices.gov.uk dedicated to helping very confused parents work out which is the best childcare financing option for them.

No doubt we’ll see a fanfare of publicity about this ‘initiative’ at the start of September. Below are 10 facts that they will undoubtedly forget to mention in the excitement of launching the new scheme that unconvincingly purports to meet one of their manifesto pledges:

1. There will be limited places available

Childcare providers are being paid around £1.50 an hour per child less than it costs to provide this service. This means they lose approximately £1,710 per year for each 30 hours free childcare place they provide.

This may go some way to explain why parents will struggle to find a place - nurseries and childminders are either closing or opting out. The Preschool Learning Alliance is estimating that 1 in 4 nurseries will close over the next 12 months.

2. It’s not free

The funding is only intended to cover the basic cost of childcare. It doesn’t cover any extras your setting providers such as meals, nappies, consumables or extra-curricular activities such as yoga and French.

The only way for many childcare providers to stay in business is to charge for these ‘additional services’. There are several ways of doing this, such as hugely complicated tariffs that are being put in place to meet the funding shortfall.

3. There are 150 different versions of this scheme across the country

The Government clearly hadn’t got a clue how to deliver this policy and has kindly ‘delegated’ the task to the 150 councils across England, each of whom has their own take on the ‘intentionally vague’ rule book. This is leading to huge confusion up and down the country as childcare providers are told conflicting advice. Visit the Champagne Nurseries for Lemonade Funding page on Facebook to get a flavour of the turmoil facing the sector, as over 16,000 concerned childcare providers try and work out how to operate this scheme and stay in business.

4. Funding is only for 38 weeks a year – not 52 weeks

Funding is only paid for 38 weeks of the year. Great if you’re a teacher or a term-time only worker, but not great for the remaining 99% of the employed population who work 52 weeks a year (minus a few weeks annual leave if you’re lucky and not self-employed like me, which equals no leave).

5. 30 hours free childcare v Tax Credits

They give it you with one hand, and take it away with the other. You need to visit the www.childcarechoices.gov.uk website to work out if claiming 30 hours free childcare will affect any of your other benefits, such as the childcare element of your Tax Credits, and find out which is the best option for you.

6. You have to wait a whole term after your child's 3rd birthday to qualify...

Quids-in if your child was born on 31 Aug - you can claim funding from 1st September. Bad luck if your child's birthday is 2 September - you lose 4 months funding as you can't claim until the following January. No particularly reason why funding is paid termly - it's just the way it is; the more cynical of us would believe that this is the government saving money.

7. Good luck with applying for your code

Get on the phone now to HMRC and apply for your code if you think you may be eligible for 30 hours free childcare. The new HMRC computer system is not the best. If you qualify you are given a code which you then pass on to your childcare provider. They then give it to the local authority to 'validate'. This keeps a whole army of civil servants in jobs while we play 'pass the code along'. Eventually someone, somewhere in a mythical land will confirm that you have in fact been 'validated' and we all live happily ever after.

The system has failed so badly to date, that HMRC has already set up a compensation scheme for parents who have ‘technical issues’ when they apply for their code. It doesn’t inspire confidence, does it. There is a certain irony in this, as they pledge to give you a one-off payment instead of the funding if you’ve had ‘technical issues’. Months ago we suggested they scrap this scheme and give parents a payment instead. Perhaps they might just start to see sense in this approach after all...

Also for some bizarre reason only known to HMRC, they are also giving out eligibility codes to parents for this coming term whose child is not yet aged 3. This doesn’t mean your child is eligible. It’s just something they do for a laugh and then let providers like us explain to parents why their child isn’t eligible after all.

8. You won't be able to choose the exact 30 hours childcare you want

Very few childcare settings are able to offer you completely free reign on using your '30 free hours' as and when you want them. Most will accept a maximum amount of hours you can use in a session (such as 3 funded hours in a morning session) so they can try and manage the chronic shortfall in funding. This is completely up to individual settings and you will have to ask for details. In order to get your full 30 hours, your child may have to attend a childcare provider over several days or a whole week.

9. You can use your entitlement across multiple providers

But no more than 2 provider in any one day (so in theory, up to 14 different settings a week). Not the best for your child, being looked after by a succession of different carers, but it may be the only way to access the full 30 hours.

10. You may have to ‘pay back’ funding if you take your child on holiday during term time or ‘funded’ hours

Bang go those cheap holidays with your kids before they start school. Your childcare provider may ask you to pay full fees for any funded or term time weeks if you take your child out to go on holiday. Funding cannot be claimed for an absent child, except sickness.

There are much better ways of making childcare more affordable for working parents such as giving them a financial payment into their Tax Free Childcare Account, which would give them flexibility to buy the childcare they need, when they want it. This has been suggested to the Government by us - but completely ignored. We live in hope that they will eventually see sense before it is too late.