The Ombudsman's final decision:
Summary: Miss X complains she has been charged a top-up fee for nursery childcare that the Council should have ensured she received free of charge. She also says the Council failed to handle her complaint appropriately. The Council is at fault and has caused injustice to Miss X. It has agreed financial remedies, an apology and service improvements.
- The complainant, who I refer to here as Miss X, says a childcare provider, Jam Kangaroo, has wrongly charged her a top-up fee when she used her free (Government-funded) childcare hours at the nursery. Miss X says that when informed of Jam Kangaroo’s pricing policy the Council’s response was inadequate. She says the Council is at fault for failing to ensure Government-funded places at Jam Kangaroo are completely free and that the nursery is transparent about its charges. As a consequence, she says she and other parents have had to pay for childcare places which are meant to be free.
The Ombudsman’s role and powers
- We investigate complaints about ‘maladministration’ and ‘service failure’. In this statement, I have used the word fault to refer to these. We must also consider whether any fault has had an adverse impact on the person making the complaint. I refer to this as ‘injustice’. If there has been fault which has caused an injustice, we may suggest a remedy. (Local Government Act 1974, sections 26(1) and 26A(1), as amended)
- If we are satisfied with a council’s actions or proposed actions, we can complete our investigation and issue a decision statement. (Local Government Act 1974, section 30(1B) and 34H(i), as amended)
- If we consider that other people have suffered injustice from the faults we find, we can recommend they receive a remedy (Local Government Act 1974, section 26(D))
How I considered this complaint
- I considered information provided by Miss X and the Council and the relevant guidance and legislation. I have shared my draft decision with Miss X and the Council and considered their comments before finalising my decision.
What I found
Nursery fees and the Free Early Education Entitlement
- The Childcare Act 2006 (as amended) places a duty on councils to secure early education provision free of charge.
- All children who meet certain eligibility criteria may take up a free childcare place. This is known as the Free Early Education Entitlement (FEEE).
- In 2018 the government issued statutory guidance councils must follow. The guidance says the free places must be completely free of charge and that Councils should ensure providers do not charge parents top-up fees. It defines these as any difference between a provider’s normal charge to parents and the funding they receive from the council to deliver the free places.
- The guidance says providers may charge for extras such as meals, snacks and nappies as part of a free entitlement place but that these must be voluntary charges. It states: “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 allowing parents to supply their own meals or nappies, or waiving or reducing the cost of meals and snacks.”
- Councils must also ensure that providers are transparent about any additional charges – for example, for parents opting to purchase additional hours or services.
- In 2019 we urged councils to have better oversight of nurseries offering free early years places after a nursery chain was found to be charging Leicestershire parents a top-up fee. In a statement accompanying the report on that case Michael King, the Local Government and Social Care Ombudsman, stated: “The government’s intentions have always been that these places are provided free of charge to parents and it is up to local authorities to administer them accordingly… Free must mean free.”
- The guidance also states that providers must publish their admission criteria and ensure that they work with parents “to ensure parents understand which hours/sessions can be taken as free provision. Not all providers will be able to offer fully flexible places”.
Jam Kangaroo Nursery’s pricing structure
- The Council has an agreement with Jam Kangaroo to deliver the FEEE. Between January 2020 and April 2021 Miss X’s daughter attended the nursery. Under the FEEE she was entitled to 30 hours’ free childcare per week for 38 weeks of the year. She attended for three full days per week for 52 weeks of the year, meaning her attendance exceeded her FEEE entitlement.
- Initially the nursery’s invoices did not provide a breakdown of its charges. Its fee structure was based on costs for a full day/short day, AM or PM or full week session. There was no indication of the hours that made up these categories nor of any additional fees, either mandatory or optional.
- In February 2021, Miss X read a local newspaper report about our decision in the Leicestershire case. She wrote to Jam Kangaroo asking for a breakdown of its charges. The nursery replied stating that the Government funding was only worth £4/hour, which spread over 12 months amounted to 95 free hours per month. It said it calculated Miss X’s bill by working out a monthly amount without any Government funding (£53.50 x 3 x 52/12 = £695.50). It then deducted the Government funding (£4 x 95 hours) to produce a figure of £315.50/month. The nursery said this figure covered Miss X’s additional hours and also meals (breakfast, snack, lunch and tea).
- Miss X complained to the Council about this. She pointed out that according to the nursery’s calculations, she was paying the difference between the nursery’s daily rate and the government funded hourly rate. She said she was not, therefore, getting 30 hours of the week free. The Council said it would review Jam Kangaroo’s charges. Shortly afterwards Jam Kangaroo emailed Miss X. Copying in the Council, it told her the Council had approved its fees sheet and invoices but not the calculations in its email.
- Several weeks later it offered Miss X £100 compensation. Miss X said this was inadequate, and that the only fee she should have to pay is the cost of non-funded hours provision, charged at the advertised day rate.
- In March the nursery also issued Miss X with a new fee sheet. This gave a breakdown of hours for each session and also included a price for “consumables” and additional activities at £13.50 per day. The nursery told Miss X the sum covered meals, use of hand-towels and soap/sanitiser, disposable gloves worn by staff, lesson materials, learning journals, activities such as forest school and soft play and events including a nativity play.
- Miss X complained to the Council that her new invoices were still insufficiently transparent as they failed to provide a full breakdown of charges. She also said that the consumables fee appeared to be mandatory and was therefore a top-up fee. She pointed out that hygiene items had been listed as consumables and that additional services such as arts and crafts were part of the basic education provided by the nursery and not optional.
- The Council told Miss X it was not its place to determine whether the amount of compensation, or the nursery’s charge for food and consumables was fair.
- It said it had “only a limited oversight role” in relation to fees charged by nurseries. It said it considered the new fee sheet to be “very clear”. It said it had spoken to Jam Kangaroo about the way it had calculated Miss X’s bill prior to its intervention, and about the email which indicated funded hours were being deducted from a standard charge. It said Jam Kangaroo had assured it that this was not the case and that the e-mail was an error.
- Miss X then came to us. She calculated she had overpaid £2,615.80 and asked for a refund of this amount. The Council responded to my enquiries as follows:
- It agreed that prior to its intervention in February 2021, Jam Kangaroo’s correspondence with Miss X suggested a top-up fee was being charged. It said it had contacted Jam Kangaroo about this as soon as it learned of the matter. However it said Jam Kangaroo had denied this and that “we do not feel that it is appropriate to say more than that it would appear, on the basis of the email, that a top-up fee was being charged”. It said its options as to what it could do were limited to the sanctions applicable under its funding agreement with providers;
- It is willing to accept a view from the Ombudsman that fee sheets and invoices must be clear about the voluntary nature of consumables charges;
- It agreed that more detail in invoices would help parents to understand what they were being charged for, and said it was raising this with Jam Kangaroo; and
- It disagreed with Miss X’s calculations, which it said had not accounted for an annualized mechanism the nursery used to balance payments across the year. The nursery had been closed for 10 weeks during the Covid-19 lockdown period and Miss X was wrong to assume her free hours continued to accumulate during that period. The Council’s position was that only the £1,538 it had charged for consumables was contestable.
- It felt Miss X should pay for consumables as she had received them. It said she had not requested that Jam Kangaroo cease providing these even when she was aware of the voluntary nature of such charges.
- It said any remedy should not be backdated until January 2020 but to the point at which the complaint was made. It said it was not able to sanction nurseries for incorrect charging beyond suspension or withdrawal of funding.
- The Council had not received any other complaints. It was concerned that a decision to refund other parents would be disproportionate to any identified fault. If this were to fall on the nursery it would undermine its ability to offer a pre-school class and the Council’s duty to ensure sufficiency of local provision.
- Jam Kangaroo told Miss X it had calculated her bill by deducting Government funding hours from its standard charges. It later told the Council it had told her this in error and that it did not charge a top-up fee. The Council did not advise Miss X of any alternative explanation from the nursery for how it arrived at the sums it charged Miss X. According to Jam Kangaroo’s correspondence with Miss X in February 2021, which was copied to the Council, the Council advised the nursery that the fees sheet and invoices were correct. However, in its response to me the Council did not say this. It said that it could not say categorically that a top up fee had been charged.
- The nursery has provided a spreadsheet explaining how it calculated its charges over the entire period, which showed deductions for the period of closure during lockdown. The spreadsheet indicates a sum of £1,538 relates to the nursery’s consumables fees. I cannot therefore say that the nursery charged a top-up fee.
- Mrs X’s method of calculation was incorrect. It gave a result which indicated she had used more funded hours during four months in 2021 than for the whole of 2020. This is because Mrs X’s method of calculation wrongly assumed that she continued to accumulate free hours during a 10-week period in 2020 when the nursery was closed during the Covid-19 lockdown.
- The Council asked Jam Kangaroo to amend its pricing structure and invoices as soon as it received Miss X’s complaint. However, it did not then ensure that either the pricing sheet or invoices were adequately clear and transparent. This was fault by the Council. In my view pricing sheets should clearly state where a charge is voluntary. Service users should be able to look at their invoices and understand exactly what compulsory and voluntary charges they are being asked to pay.
- The Council should have queried the nursery’s inclusion of essential hygiene items in a list of “optional consumables”. It should also have established how the nursery manages children who opt out of particular activities which are listed as voluntary. This is fault by the Council.
- Miss X has suffered an injustice in that she was not given the option of opting out of the consumables charge. I agree with the Council that Miss X did receive consumables during the period of her daughter’s attendance at Jam Kangaroo and that a full refund would not be appropriate. I consider the Council’s evidence supporting its suggested charge of £8 is compelling.
- I considered whether the personal remedy should be backdated to January 2020. I do not agree with the Council’s position that it only needs to provide a remedy from the date the complaint was made – this would be inconsistent with the Ombudsman’s approach to remedies, which aims to return the complainant to the position they would have otherwise been in were it not for the fault. The fact the Council cannot impose a sanction on the nursery is not a relevant factor to our recommendations.
- I therefore recommended that the Council pays Miss X a refund of £1,538 minus a charge of £8 per day for meals. I also recommended it pays her £200 for her time and trouble in bringing the complaint as well as an apology. The Council agreed to this.
- The Council has agreed that within one month of my final decision it will:
- Pay Miss X a refund of £1,538 minus a charge of £8 per day for meals;
- Pay Miss X £200 to compensate for her time and trouble in bringing the complaint;
- Apologise to Miss X; and
- Ensure Jam Kangaroo changes its fee sheet to ensure that any fees for consumables are clearly marked as voluntary. The Council should also ensure that consumables do not include items or activities which parents cannot realistically decline to use or participate in; and
- Ensure parents can understand from Jam Kangaroo’s invoices what voluntary charges they have paid and how final sums charged have been reached.
- I have completed my investigation with a finding of fault by the Council, which has led to injustice. It has agreed a financial remedy, apology and service improvements.
Investigator's decision on behalf of the Ombudsman