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Do I have to pay my childcare provider if they are closed due to the Government announcement?

With the announcement yesterday evening (19th March 2020) that schools and early years childcare providers must close their doors to all but essential key workers’ children on Friday, many parents, facing the prospect of no childcare and possibly no income themselves, are now wondering where this leaves them with regards to having to pay childcare fees.

I’m not a contract specialist or a lawyer so please don’t take anything written here as ‘formal’ advice. However, from experience, I can point to a few areas to consider.

When your child started at the childcare provider you probably signed some kind of contract specifying what happens if the setting is closed due to emergencies, holiday periods or other situations. How detailed it is and whether fees are still due, will vary from setting to setting. So, my first bit of advice would be to check the terms and conditions that you signed up to.

I know some parents have been told by their childcare provider that fees will still be due and are now considering removing their child from the setting. Two things to bear in mind:

  • The terms and conditions probably specify a notice period if you no longer want your childcare place. During this notice period fees are probably payable, and you may well have to pay these fees even if the setting has closed. Although, with the government giving no end-date for compulsory closures, the notice period could possibly be shorter than any compulsory shut down.

  • When the childcare setting (hopefully) reopens, your child won’t be guaranteed their childcare place and may have to join a waiting list.

But what about the moral viewpoint?

This will depend on individual family circumstances. Some people will be in the fortunate position of still having work they can juggle from home and thus will still be getting an income. Others have already been asked to take unpaid leave and so will already be struggling with their own finances. And others, sadly, will already have lost their income. What you can do and decide to do will be a matter of personal choice. For example, I have already committed to paying my own childminder but, as a freelance worker myself, I will need to monitor how long I can keep that up.

Most childcare providers are run by a person just like you. They may have spent years building up their business and now face the very real prospect of losing their business and their own income. Nursery owners have to consider the knock-on impact for their staff. For many nurseries, if you don’t pay your fees (or at least some of them) they can’t pay their staff. If they have to make staff redundant this not only affects the wider economy but also means that, when settings are able to re-open, there won’t be staff employed to be able to care for your children. It will take time to get people re-employed and will impact how quickly childcare settings are able to start caring for your children again.

But surely the setting has insurance to cover situations like this?

Some settings may well be able to claim on Business Interruption Insurance and it is certainly worth asking the question, particularly if your setting is part of one of the larger chains. But the reality is that many settings are unlikely to have insurance to cover something as unprecedented as the COVID-19 pandemic.

But hang on, didn’t the government announce support for businesses during this time?

Yes, a range of measures have been announced, such as government backed loans, a business rate holiday and confirmation that providers would still receive payments for children on two-three-or four-year-old funding. However, less than 50% of children who make use of early years settings are in receipt of early education funding and furthermore it is well known that the hourly rates paid to providers do not cover the full cost of providing care.

The sector has been lobbying government for a number of years for a business rate exemption to help keep the sector viable in normal times. While this latest announcement is welcome for many providers it still won’t go far enough in this difficult time.

Furthermore, while the measures will help some nurseries, others will simply not find them enough. The Early Years sector was already struggling before the Covid-19 outbreak and, for many, taking a loan that will have to be paid back, will not be an option.

It is a sad fact that the government’s announcement to close childcare settings will mean that some providers will no longer be around when life returns to normal. Furthermore, a childminder who is self-employed, will have no access to most of these packages of support.

So, what should I do?

Whether you chose to pay your childcare provider during this difficult time is something only you can decide. If your setting is asking you to pay 100% of your normal fees you could ask them to justify their demand - beyond just pointing to their terms and conditions. It is likely that some of their costs will reduce (for example, utility and food bills and business rates). But expenses like rent will still be payable and many settings will be reluctant to make staff redundant. If they are proposing to keep paying staff, you could ask the nursery to provide some virtual support to you with regards to your child’s ongoing learning and development.

But please tread carefully when talking to your childcare provider! Nursery owners are facing the very real prospect of losing a well-loved business. Nursery managers will simply be passing on messages from above. Childminders will be fearful of losing their income.

You may find that your setting is unable to provide you with a clear picture by Friday. Everyone is trying to understand the implications of this unprecedented situation. It will take time for settings to adapt but they will do their best to keep you updated.

If you have any further thoughts or questions, please feel free to share them.

Further support for parents can be found on the dedicated parents pages of Cambridge Early Years