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Education Secretary asks CMA to investigate hidden charges in government-funded free childcare
The UK Education Secretary has asked the Competition and Markets Authority to investigate reports of hidden extra charges in government-funded childcare. Parents accessing the free 30-hour childcare offer are facing non-refundable deposits, food fees and nappy charges that make the scheme unaffordable. The childcare sector says charges are needed because it is grossly underfunded.
The UK Education Secretary has confirmed she is asking the Competition and Markets Authority to investigate reports of hidden extra charges being levied by nurseries on top of the government's free childcare offer. The move comes after growing complaints from parents who are finding the supposedly free scheme increasingly unaffordable.
Parents accessing the 30-hour free childcare entitlement, which came fully into force from September last year covering children from nine months to school age, are reporting being faced with non-refundable deposits, fees for food and trips, and charges for nappies. These additional costs are building up and leading some parents to conclude they simply cannot afford childcare at all.
The childcare sector and nurseries argue that these extra charges are necessary to make their businesses commercially viable. They say the sector has been grossly underfunded for years and that cross-subsidies through additional charges are the only way to keep nurseries financially afloat while offering the government-funded hours.
The free childcare policy was designed as a major intervention to support working parents, enabling them to place children in nursery care and return to work, with broader benefits for the economy. However, the gap between government funding rates and the actual cost of providing childcare has created a system where free hours come with hidden costs.
The CMA investigation will examine whether the charges constitute unfair commercial practices and whether parents are being given adequate transparency about the true costs they will face. The outcome could have significant implications for thousands of childcare providers across the country and for the millions of families relying on the government's flagship childcare policy.