Education Secretary Bridget Phillipson has ordered an immediate review of escalating childcare costs after families reported being hit with hidden fees that undermine the government’s flagship 30 hours of free childcare scheme.
Ofsted-registered providers in London, Manchester, and Birmingham disclosed that parents are routinely charged for extras such as registration fees, late collection penalties, and mandatory resources like stationery or meals, despite the government’s pledge of free provision. Phillipson confirmed the probe in a statement to Parliament on Wednesday, labeling the practice as "unacceptable and potentially unlawful."
Key Points
- ⚠️ Parents report fees for ‘free’ hours ranging from £200 to £600 annually
- 🔍 CMA investigation to focus on 15,000+ registered providers nationwide
- ✅ Phillipson threatens legal action if providers fail to comply with transparency rules
Data from the Family and Childcare Trust reveals that 68% of nurseries in England impose at least one undeclared charge, with some parents in affluent areas paying up to £1,200 extra per year. The review will examine whether providers are exploiting loopholes in the 2023 Childcare Act, which mandates free provision but lacks clarity on permissible extras.
| Fee Type | Average Cost | Legal Status |
|---|---|---|
| Registration fee | £50–£150 | Unregulated |
| Late collection fine | £1–£5 per minute | Permitted with parental consent |
| Mandatory meal charge | £3–£6 per day | Disputed under free hours policy |
The CMA’s investigation will prioritize providers in areas with the highest reported complaints, including Bristol, Leeds, and Sheffield. Phillipson has also instructed Ofsted to ramp up inspections of 500 randomly selected nurseries by June, with results published in a public database.
📋 By The Numbers
- 15,000 — Registered childcare providers in England
- 68% — Nurseries charging undeclared fees in 2023
- £1,200 — Maximum extra annual cost for some parents
Shadow Education Secretary Robert Halfon accused the government of "failing to protect parents" and called for an immediate cap on all fees beyond the 30-hour entitlement. "This is a systemic issue that requires urgent action, not another review," Halfon said. The Department for Education has not yet outlined potential penalties for non-compliant providers but confirmed that legislative changes are under consideration.
💡 Pro Tip
Parents should request a full breakdown of fees before enrolling, including any ‘voluntary’ contributions, and report undeclared charges to the CMA via their website.
The review comes ahead of the next general election, with polling showing childcare costs as a top voter concern. A government source revealed that Phillipson is exploring options to subsidize these hidden fees directly through the Department for Education, though no decision has been made. The CMA’s interim report is due in September, with final recommendations expected by March 2025.
- June 2024 — Ofsted begins targeted nursery inspections
- September 2024 — CMA publishes interim findings
- March 2025 — Final recommendations due
Providers found to be in breach of transparency rules could face fines of up to £10,000 under existing consumer protection laws. Phillipson has also held private meetings with major childcare chains, including Bright Horizons and Kids Planet, urging them to voluntarily waive undeclared fees while the review proceeds.