Government is standing up for parents facing eye-watering childcare costs including non-refundable deposits and basics like nappies and suncream.
The Education Secretary has written to the independent Competition and Markets Authority (CMA) as part of new government action to tackle hidden childcare fees hitting families.
While funded hours are meant to be free, too many parents report being asked to pay extra to secure a place including upfront deposits, compulsory add-ons, or additional hours to access their entitlement.
These practices undermine the value of 30 hours of free childcare and add to the pressure on working families. Nearly three quarters (72%) of parents say they are using savings to cover extra charges, while more than one in four (27%) say cost remains the biggest barrier to accessing the childcare they need.
A new free cost of living tool will also help parents make the most of the childcare offer, from finding local provision to planning and getting exactly what they are entitled to.
Government support is already massively reducing costs, with eligible families saving an average of £8,000 a year per child and more than 500,000 families now benefiting from funded hours.
Education Secretary Bridget Phillipson said
I grew up in a family that knew what it meant to count every penny. I am so proud of the crucial difference that 30 hours funded childcare makes to family finances, saving £8,000 a year per child on average.
The vast majority of nurseries and childminders have been brilliant in helping us deliver, but I will not accept the small minority letting families down and stopping them get what they were promised.
The government has also asked the CMA to do more to investigate the role private equity and other ownership models are playing in the childcare market, including whether they are working in the interests of families or driving up costs and creating risks for those who depend on their local nursery.
The new cost of living tool also includes a trial of a new map of local childcare. Launching first in Bristol, South Gloucestershire and Bath and North East Somerset, the map will help families find funded childcare near them while promoting local nurseries and childminders to more parents. Families nationwide will be able to use it later this year.
This work sits alongside a wider government drive to make life simpler and more affordable for families. The newly launched GOV.UK Chat – a new AI tool that allows parents to ask questions in plain English and get instant answers about what support they could have – means help is now available at any time of day.
ENDS
Additional quotes
Joeli Brearley MBE, campaigner for working parents, and director of Growth Spurt said
Whilst many nurseries are doing their best for families and charging fair top-up fees, some are demanding extraordinary sums on top of the so-called ‘funded’ hours. Every week we hear from parents who simply cannot access childcare because the additional costs are so high. In some cases, parents are being priced out of work altogether. We welcome the Government asking regulators to investigate excessive charges and crack down where families are being exploited. Parents were promised affordable childcare, not a Trojan horse bill landing on the doormat each month.
We have long warned about the growing role of private equity in childcare. When childcare becomes a vehicle for extracting profit, children and families inevitably lose out. Private equity leaves the sector vulnerable to instability and collapse, while taxpayer money is diverted into shareholder returns instead of high-quality care and early education.
Taxpayer-funded childcare should give children the best possible start in life, not line the pockets of investors. It is therefore a huge relief to hear the Government will finally investigate this too.
Vaila McClure, Head of Comms and External Affairs, Gingerbread said
We welcome the Education Secretary’s focus on childcare. While most single parents are in work, this does not protect them and their children from poverty and hardship. Many single-parent families are living on a financial cliff edge, meeting all their living costs from a single income. This includes the cost of childcare, which is essential if single parents are to find and stay in work.
Our childcare system urgently needs reform. Without meaningful change, too many single parents and their children will remain trapped in hardship and poverty, with long-term consequences that no family should face.
Michelle Kennedy, CEO and Founder of Peanut said
At Peanut, we hear every day from mothers navigating impossible trade-offs between work and childcare costs. Hidden charges and non-refundable deposits add insult to injury when families are already stretched. The promise of free childcare must actually be free, and today’s action is a meaningful step toward making that a reality.
