Summary: The Council failed to consider whether Mrs X had suffered an injustice because of issues with a nursery provider’s charging policy, failed to carry out an audit and failed to put Mrs X’s complaint through its complaints procedure. An apology, payment to Mrs X and an audit of the nursery provider to establish whether it is complying with government guidance is satisfactory remedy.

The complaint

1. The complainant, Mrs X, complained the Council:
• failed to investigate and act on concerns she raised about the consumable charges her daughter’s nursery made;
• failed to disclose an audit report; and
• failed to provide her with adequate assistance when the nursery terminated her daughter’s place.
2. Mrs X says the Council’s actions have affected her family’s health and she is out of pocket financially.

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The Ombudsman’s role and powers

3. 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)
4. If we are satisfied with an organisation’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)
5. Under our information sharing agreement, we will share this decision with the Office for Standards in Education, Children’s Services and Skills (Ofsted).

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What I have and have not investigated

6. The Ombudsman does not investigate the actions of childcare providers as they are not a body within our jurisdiction in the same way councils are.
7. However, councils are subject to some legal duties in relation to local childcare providers and the Ombudsman can investigate whether councils have had regard to these duties.
8. In this case I have not investigated the childcare provider itself. I have investigated the steps the Council took to respond to Mrs X’s complaint and its actions to ensure compliance with relevant law and guidance by the childcare provider.

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How I considered this complaint

9. As part of the investigation, I have:
• considered the complaint and Mrs X's comments;
• made enquiries of the Council and considered the comments and documents the Council provided.
10. Mrs X and the organisation had an opportunity to comment on my draft decision. I considered any comments received before making a final decision.

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What I found

Legislation and guidance

11. The Childcare Act 2006 (as amended), the Local Authority (Duty to Secure Early Years Provision Free of Charge) Regulations 2014, the Childcare Act 2016 and the Childcare (Early Years Provision Free of Charge) (Extended Entitlement) Regulations 2016 set out councils’ duties to secure early education provision free of charge.
12. All children who meet certain eligibility criteria may take up a free childcare place. This is known as the Free Early Education Entitlement (FEEE).
13. In 2018 the government issued the Early Education and Childcare Statutory Guidance. Councils must follow the guidance unless there is a good reason to depart from it.
14. The guidance says local authorities should:
• work with providers and parents to ensure that all parents have fair access to a free place, which must be delivered entirely free of charge;
• ensure that providers do not charge parents ‘top-up’ fees (any difference between a provider’s normal charge to parents and the funding they receive from the local authority to deliver free places);
• ensure that providers are completely transparent about any additional charges, for example, for those parents opting to purchase additional hours or services; and
• work with providers to ensure their invoices are clear, transparent and itemised allowing parents to see that they have received their child’s free entitlement completely free of charge and understand fees paid for additional hours or services.
15. The Guidance also says:
• providers can charge for meals and snacks as part of a free entitlement place and they can also charge for consumables such as nappies or sun cream and for services such as trips and specialist tuition; and
• parents can be expected to pay for these, although these charges must be voluntary for the parent. 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.
16. The Childcare Act 2006 section 9 says councils must exercise their functions with a view to securing childcare providers’ compliance with these requirements.
17. 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 (19 004 977). In a statement accompanying the report on that case we said:
• “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 Council’s Local Provider Agreement

18. The Council has a legal duty to secure FEEE places for every eligible child in our area and will work in partnership with providers to agree how to deliver free entitlement places.
19. The provider should deliver the FEEE consistently to all parents, whether in receipt of funded hours claimed and regardless of whether parents opt to pay for additional hours, services or consumables. This means that the provider should be clear and communicate to parents the details about the days and times that they offer funded places, along with clear information about their services and charges. Changes in fees for additional hours, services or consumables should be communicated to parents with children already enrolled in good time (no less than one calendar month, but ideally a term in advance). Those children accessing the free entitlements should receive the same quality and access to provision as privately-paying children.
20. The Council reserves the right to audit all providers who have delivered the FEEE within the past 6 years. The purpose is to ensure all providers are providing compliant delivery of government funding and to keep standards high for families. This includes admissions policies. The Council will select providers at random each month but audits can also be triggered by:
• a parent complaint;
• a breach of the terms of this agreement;
• consistent mistakes on the headcount or census.
21. Providers are not permitted to charge parents 'top up fees' (the difference between a provider's normal private hourly rate and the funding they receive from the Council).
22. Providers can charge for meals and snacks as part of a funded place and they can also charge for consumables (such as nappies or sun cream) and for activities (such as trips and yoga). These charges must be optional for parents. Where parents do not choose to engage in these charges, parents should not expect to access the meals, consumables or activities freely. Providers are responsible for setting their own policy and may consider options which include waiving or reducing the cost of or allowing parents to supply their own items. Additionally, providers may use Early Years Pupil Premium to fund meals, consumables and/or activities after assessing how best to support each child.
23. Children must be able to access the provider's funded sessions without the cost of a meal being a condition imposed on them. If parents want a session that covers a mealtime, a parent should have the option of bringing in a packed lunch. If the provider is not willing for children to have packed lunch (e.g. because of reasonable restrictions due to health and safety), there must be an option of accessing a session that does not have a mealtime option. Charges for meals must be itemised on a child's invoice, but may be combined into a wider consumables charge.
24. Parents can also expect to pay for consumables utilised by their child. However providers must not obligate parents to pay for consumables offered in order to access their funded place. The grouping of individual consumable costs is permitted to enable easier invoicing but providers must clearly state in their admissions policy a summary of what is included, in order to be transparent to parents about the charges they asking to be paid. Providers must not charge parents a 'top-up' against their hourly rate (e.g. £1 per hour for each funded hour) where the charge is truly for consumables.
25. Parents can also expect to pay for activities taken up by their child, e.g. trips, but providers cannot charge for activities which form part of their standard early years foundation stage practice (e.g. messy play, outdoor activities etc.). Providers must not obligate parents to pay for activities and must ensure that a child's usual funded hours/sessions are not affected by the organisation of such events, should the parent(s) choose for their child not to take part. Charges for activities must be itemised on a child's invoice but may be combined into a wider consumables charge.
26. Providers must produce an invoice for all children accessing funded hours, which must clearly identify which sessions were delivered without charge (shown as a zero charge), as well as which sessions/consumables/meals/activities were chargeable. Meals, consumables and activities can be 'grouped' together to form one charge, but this must not contain any additional hours (privately paid hours).

What happened

27. Mrs X sent her daughter to a nursery which provided a Montessori education. Mrs X’s daughter was entitled to FEEE. The nursery charged Mrs X a fixed amount per hour to cover consumables. That included the Montessori education, snacks and meals. The nursery’s funded hours policy at the time said:
• ‘‘consumable charges are payable for every funded hour and include meals, snacks and specialist tuition (delivering the Montessori curriculum). This is not an exhaustive list. Funding for 2-year-olds is significantly higher than for 3 and 4-year-olds. Therefore the consumables charges for 2-year-olds will be lower than for 3 and 4-year-olds. Families should anticipate an increase in fees starting from the term after their child turns 3. We reserve the right to change this amount when funding amounts change.’’
28. When Mrs X challenged the nursery about the charges it said it was important to note the funding was not free and should only be seen as a discount. The nursery told Mrs X the government did not cover the actual cost of providing its service and therefore for each of the funded hours it charged a consumables fee.
29. Mrs X contacted the Council to raise concerns both about the voluntary nature of the charge and the failure to provide an itemised breakdown. The Council visited the nursery, following which the nursery issued a revised funded hours policy. The section on the consumables cost now said:
• ‘‘these are payable for every funded hour and include meals, snacks and specialist tuition (delivering the Montessori curriculum). The funded hours paid by the Council only cover the most basic early education. Your choice to embrace the Montessori methodology means that the cost of delivering our service is significantly higher. Parents cannot expect not to pay the consumable charge and access the same high levels of education. Please come and speak to a manager if you have any questions.’’
30. The Council wrote to Mrs X to tell her about the changes. The Council explained because Mrs X’s daughter had accessed the Montessori education for her daughter as well as meals and snacks it could not ask the nursery to offer a reimbursement. The Council said though under the new policy the provider had added in an option for parents who did not wish to pay to speak to a manager.
31. The Council told Mrs X the optionality of the previous policy was not in accordance with the statutory guidance. The Council said though while it could see how it was possible for a child not to take part in snacks and meals it did not see how the additional educational element of the consumables charge could be omitted at a Montessori school. The Council asked Mrs X how she thought that might work if she chose to opt out. The Council explained the nursery did not have to provide calculations on how it arrived at the value and had explained the charges related to snacks, food and additional education. The Council said breakdowns from hundreds of other providers were no more detailed.
32. The nursery later provided Mrs X with a breakdown of the charges which it said it had provided as a one-off. After further communications between Mrs X and the nursery the nursery gave two months notice on Mrs X’s daughter’s place.
33. Mrs X contacted the Council to raise concerns about the nursery’s actions. The Council explained it could help Mrs X to look for an alternative provider and had spoken to another nursery and was awaiting a call back. In response, Mrs X told the Council she had contacted the other nursery herself and it could have a place for her daughter soon.
34. Mrs X put in a formal complaint about how the Council dealt with her concerns. The Council sent Mrs X a brief response to say it was satisfied it had thoroughly carried out an audit for the consumables charge and had addressed those matters and provided a response previously.

Analysis

35. Mrs X says the Council failed to investigate and act when she raised concerns about her daughter’s nursery making compulsory consumables charges which it had not explained.
36. I am satisfied the Council acted on Mrs X’s concerns by visiting the nursery to inspect its paperwork. I am also satisfied the Council identified the nursery was not complying with the statutory guidance which is why it sought, and obtained, changes to the admissions policy. I am satisfied that related to whether the consumables charge was voluntary.
37. I am concerned to note though the Council did not keep any notes from its visit to the nursery to record what it had discussed. That is fault. The Council also did not complete an audit, despite telling Mrs X it had done so. Giving Mrs X misleading information about that is fault.
38. The Council says it did not complete an audit because the concerns Mrs X raised were not raised as a complaint. However, as I set out in paragraph 20, there are other circumstances in which the Council can complete an audit. That includes when it has identified a breach in the terms of the nursery’s agreement with the Council. I am satisfied that is the case here as the Council had identified the nursery had not complied with government guidance in charging a mandatory fee for consumables. In those circumstances I would have expected the Council to carry out an audit and follow-up monitoring to satisfy itself the nursery was complying with the statutory guidance. Failure to do that is fault.
39. I am also concerned when Mrs X made a complaint about how the Council had handled the matter it failed to put that complaint through its complaints procedure. That is fault. Because of that the Council also failed to consider whether Mrs X had suffered an injustice for which a remedy, other than changes to the policy, were required. Mrs X had provided the Council with copies of communications between her and the nursery which I am satisfied showed the consumables charge she had paid had been a mandatory charge. I have seen no evidence the Council considered that point and whether any remedy was appropriate for Mrs X. That is fault.
40. The Council has made the point that the nursery Mrs X chose provides a Montessori education. The Council questions how a parent sending their child to such a nursery could avoid the additional charge. While I understand the point the Council makes government guidance is clear nursery places must be provided free of charge.
41. It may be difficult for the nursery to provide a Montessori education to some children and not others. However, the nursery is not obliged to accept government funding under the FEEE. The statutory guidance is clear once it does it should not charge a standard fee on top which has the effect of making free childcare not free. The statutory guidance does not allow nurseries to have a compulsory charge for ‘specialist tuition’ for parents using the FEEE. I am not satisfied the Council has properly considered that point and that is fault.
42. I am also not satisfied the Council has established the nursery is now complying with the statutory guidance around voluntary charges. I appreciate the Council has secured changes to the nursery’s policy. However, I am not convinced referring parents to a manager provides any evidence, without further monitoring by the Council, the nursery has made the charge voluntary. Failure to investigate that point is fault.
43. Mrs X raises concerns about the Council’s failure to help her when the nursery terminated her daughter’s placement. The evidence I have seen satisfies me the Council offered to help Mrs X look for another nursery and contacted one on her behalf. The evidence also shows Mrs X told the Council she had already identified an alternative placement for her daughter. In those circumstances I have no grounds to criticise the Council for how it dealt with this part of the complaint.
44. I am satisfied the Council has established that the nursery did not give Mrs X the option of pursuing her FEEE place for her daughter without the consumables charge and failed to seek any remedy for Mrs X. Mrs X is also left with some distress that the Council failed to properly consider the impact on her. As remedy for that I recommended the Council apologise to Mrs X, pay her £200 to reflect her distress. I also recommended the Council reimburse Mrs X for the mandatory consumables charge she paid from the point at which the Council could reasonably have intervened to put things right, which is September 2024. The Council has agreed to my recommendations.

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Action

45. Within one month of my decision the Council should:
• apologise to Mrs X for the distress she experienced due to the faults identified in this decision. The Council may want to refer to the Ombudsman’s updated guidance on remedies, which sets out the standards we expect apologies to meet;
• pay Mrs X £200 to reflect her distress and the time and trouble she had to go to;
• reimburse Mrs X for the mandatory consumables charge she paid from September 2024.
46. Within three months of my decision the Council should carry out an audit of the nursery to determine whether it is complying with the statutory scheme. If that audit identifies any concerns the Council should consider what action to take.
47. The Council should provide us with evidence it has complied with the above actions.

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Final decision

48. I find fault causing injustice. The Council has agreed actions to remedy the injustice.

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Investigator's decision on behalf of the Ombudsman