Competition Watchdog to Probe Undisclosed Childcare Fees, Government Announces

Education Secretary Bridget Phillipson is set to instruct the Competition and Markets Authority (CMA) to investigate potential hidden fees that parents might encounter when accessing state-supported childcare. The move comes amid growing concerns that the financial burden of securing nursery places is undermining the government’s initiative to provide 30 hours of free weekly childcare for eligible working parents of children aged nine months to four years in England.

According to early reports from the Financial Times, ministers fear that demands for non-refundable deposits and charges for essentials such as meals, snacks, nappies, and sunscreen are creating significant barriers for families already under financial strain. The CMA, whose mandate includes safeguarding consumers and fostering market competition, will be asked to examine whether these practices are distorting the market and hindering access to essential services.

Rick Kelsey, a personal finance journalist, shared his experience with BBC Radio 4’s Today programme, revealing that he faced an additional daily charge of £16 for consumables like food and sunscreen, despite the new grants. "I don't know about you but I'd love to see a toddler eat £16 worth of chicken nuggets and Babybel in a day," Kelsey remarked. He described the situation as a "game of smoke and mirrors," noting that many parents remain uncertain about their final monthly bills. However, Kelsey also acknowledged the difficulties faced by providers, stating that nurseries are themselves "being stretched for funding," even if the resulting costs for parents seem unrealistic.

In response to the government's planned inquiry, Neil Leitch, chief executive of the Early Years Alliance, argued that the root issue lies in systemic underfunding rather than individual provider practices. Leitch characterized the extra charges as a necessary "cross subsidy" due to years of insufficient government support. "If you're going to ask the CMA to look at anything why don't you ask them to look at if the sector is adequately funded," he urged. He criticized the government for increasing National Insurance contributions without adjusting the funding rates paid to providers, calling the economic logic "fundamentally flawed" and asserting that the sector feels "short changed."

A spokesperson for the CMA welcomed the Education Secretary’s request, stating, "We welcome the request from the education secretary to carry out a review into the early years childcare sector." The regulator added that it has been monitoring the sector and is currently developing a specific proposal to present to its board.

The expansion of free childcare began under the previous Conservative administration, which initially offered 30 hours of free care for 38 weeks a year to working parents of three- and four-year-olds, later extending it to younger children. The current Labour government has broadened this further, making free care available to eligible parents for children from nine months old up to school age. Department for Education (DfE) data indicates that over 1.7 million parents in England are currently utilizing these government-funded hours.

Despite these expansions, costs remain a concern. A recent annual survey by the charity Coram and Family Childcare found that the average weekly cost for full-time nursery care (50 hours) for a child under two in England is just under £149 in 2026, representing a 39% decrease from the previous year. In comparison, the average cost for similar care in Scotland is £259.10 per week, while in Wales it stands at £325.12.

This initiative follows a challenging period for the government, which faced poor results in recent local elections in England. Officials are eager to demonstrate tangible action on the cost-of-living crisis, particularly as households grapple with rising fuel prices and anticipate higher energy and food bills due to supply chain disruptions linked to the war in Iran.

Source: BBC News Generated at: 2026-05-25 21:47:18 UTC