Childminding - Business models for childminders

Childminders are a vital part of the childcare workforce, but their numbers have dropped significantly over the past few years. Even with the incentive of up to £1,200 to register as a childminder, there still may not be enough to accommodate the number of children that will be eligible for the expanded funded places.

The Department for Education (DfE) is currently focusing on recruitment and retention of childminders, but there is still a long way to go to make up the numbers to successfully enable all eligible children to take up a funded place.

Childminding UK carried out a sustainability survey that highlighted that over 60 per cent of childminders were worried about the sustainability of their business going forward.

Within this there were several reoccurring themes that most concerned them, with many feeling that they may end up having to close.

Overwhelmingly, childminders said that they wished the Government would stop referring to the funded places as ‘free’. For many childminders, funding covers just two-thirds of the actual cost of delivering a place and they have to charge parents additional costs to make their business viable. This is confusing for parents who are being asked to pay a voluntary payment to cover the difference.

Some local authorities still prefer to pay childminders termly, which can cause cashflow problems for childminders who are asked to take on more funded children. Local authorities have been told that they should pay monthly if childminders request it, but this is only guidance, so some still have not put this in place.

Continuing to be paid termly has a huge negative impact on childminders who access Universal Credit as the larger termly amount can wipe out the benefit payments completely. The special rules around allowable expenses HMRC accept are not accepted by Universal Credit, which leads to childminders being told their income is actually more than HMRC recognises, and this is causing a reduction in their benefits.

Addressing these issues could really help childminders be sustainable and increase recruitment and retention rates.

As a not-for-profit charity, we decided to use the information gathered from our sustainability survey and the information from Government guidance to identify six business models for childminders to consider; they are:

1. If Government funding is the same rate as their usual hourly rate, parents could choose the hours of funding they need and pay the childminder their usual hourly rate for any additional hours they need. (Remembering that different age groups have different hourly funding rates, so a child may start with the childminder on this business model but may need to change as they grow if their new rate is lower).
2. Limit the number of funded hours available in a day, with parents paying for additional hours at a rate that covers any shortfall. They may wish to consider set morning or afternoon session times for children who don’t attend all day, with some permitted funded hours only.
3. They could request voluntary payments with parents choosing the hours of childcare they need and then the childminder requesting a voluntary payment per hour to cover the shortfall between Government funding and their usual hourly rate.
4. Request consumable payments. Parents could choose the hours of childcare they need and then the childminder request a consumables payment to cover items such as outings, additional activities, meals, nappies, etc. Some childminders charge a set rate per day/week, with others charging according to the individual child.
5. Limit the number of funded children each day. They could decide how many funded places they will offer in a day, with other places being paid for privately by parents. This may help subsidise funded places, or because their local authority pays termly and they need a more regular cashflow.
6. Private provision only. They may decide to only offer private places and no funded places. This may work well in some areas, but may not work in less affluent areas.

More information on these business models can be found in our free ‘Managing Funding – Business Sustainability Pack’. This guide includes a document for childminders to share with parents and encourage discussion so they understand that without them making voluntary payments, their child would not be able to access the high-quality childcare experiences childminders want to provide.

From this autumn, the Department for Education was due to introduce further changes for childminders in the hope that these will encourage new childminders to register and help with the retention of others, however with the General Election looming, the following measures, may not be introduced:

• Creating a new category of childminder called ‘childminders without domestic premises’. This is for childminders who will work solely from somewhere other than a home, such as a community or village hall.
• Although this may help those who can’t childmind from home due to restrictive covenants or obstructive landlords/mortgage companies, it is difficult to see how someone working 100 per cent on non-domestic premises can be called a childminder, who by its own definition offers ‘home based childcare’. Not enough information has yet been given to show how this category is different to running/working in a small nursery. With childminders already struggling to make ends meet, it will be interesting to see how they feel about the affordability of hiring premises.
• There is to be an increase to the total number of people (including childminders and assistants) who can work together under a childminder’s registration from three to four. This will help childminders who are thinking of expanding their businesses, but it would have to be considered alongside the space requirements within the home. Managing assistants also come with extra responsibilities for the childminder, whether they be employed or self-employed, and care needs to be taken to ensure safer recruitment and understanding around areas such as disqualification by association rules. Time would need to be given to ensure inductions, supervisions, appraisals and CPD are up to date, which may increase the workload of the person in charge. Consideration would also need to be given to how childminders and staff work to maintain the ethos of the setting and how quality of care stays consistent.
• Any childminders who want to work with four or more other adults (five plus in total) will need to register as ‘childcare on domestic premises’. The changes will allow for existing ‘childcare on domestic premises’ providers to continue operating with a minimum of four people. But if they submit a new registration for ‘childcare on domestic premises’, they will need to have a minimum of five people, otherwise they will need to register as a childminder.
• To give more flexibility to operate outside of the home (or someone else’s) for more of their time, the requirement that at least 50 per cent of the provision must be provided in a home is being removed. There has not been sufficient information given regarding this yet, so it is uncertain what this will look like for the majority of childminders. But there is a danger that most of the care may not be home from home childcare that makes childminding unique.

All of these changes may increase numbers of spaces for children to access their funding, but we do have to ask ourselves if the move away from traditional childcare will really benefit our youngest children who we know thrive so well when attending a childminding setting.

• www.childmindinguk.com