Education Secretary Bridget Phillipson is set to request that the Competition and Markets Authority (CMA) investigate additional costs parents may incur when using government-funded childcare. The move comes amid concerns that these hidden charges could be undermining the availability of free childcare for eligible families.
The government offers 30 hours of funded childcare per week for eligible working parents in England whose children are between nine months and four years old. However, ministers have received reports that some parents are being asked to pay non-refundable deposits or cover additional expenses such as meals, snacks, nappies, and sun cream, even when using these funded hours.
These additional costs are a concern as they may present a financial barrier for parents who need childcare, particularly those already facing economic pressures. The CMA, an independent body responsible for promoting competition and protecting consumers, will examine whether these practices are fair and transparent.
Personal finance journalist Rick Kelsey shared his experience of being charged an additional £16 per day for consumables, describing the situation as a "game of smoke and mirrors." He noted that while parents may find the bills unrealistic, nurseries themselves are also reporting funding pressures. Neil Leitch, chief executive of the Early Years Alliance, a membership organization for childcare providers, stated that these extra costs act as a "cross subsidy" due to years of underfunding in the sector. He suggested that the CMA should also investigate whether the sector is adequately funded.
A spokesperson for the CMA confirmed they welcome the request from the education secretary and have been monitoring developments in the early years childcare sector. The authority will develop a specific proposal for its board regarding the review.
The provision of free childcare in England has been expanded over recent years. Initially introduced for three and four-year-olds, the scheme was later extended to younger children. More than 1.7 million parents in England now utilize government-funded childcare hours. Despite the expansion, the average cost of full-time nursery care for a child under two in England remains significant, with recent data indicating an average weekly cost of nearly £149 in 2026 when including funded hours. This cost varies across the UK, with Scotland and Wales reporting higher average weekly costs for similar care.
The government's decision to request this review occurs amidst broader efforts to address the cost of living. Recent policy announcements have included measures such as VAT cuts on family attractions, free bus travel for under-16s during August, and reductions in import taxes on certain food items as part of a "Great British Summer Savings" campaign.