Competition Authority to Probe Undisclosed Childcare Fees, Education Secretary Announces

Education Secretary Bridget Phillipson is set to instruct the Competition and Markets Authority (CMA) to investigate the hidden fees that parents may encounter when accessing government-subsidized childcare. While working parents in England with children aged nine months to four years are legally entitled to 30 hours of weekly funded care, ministers fear that families are still being hit with extra charges to secure spots. These costs often include non-refundable deposits, as well as mandatory payments for essentials such as nappies, meals, snacks, and sunscreen.

Concerned that these additional expenses could prevent financially strained parents from accessing necessary care, the government will ask the CMA, whose mandate includes safeguarding consumers and fostering competition, to look into the matter, as first reported by the Financial Times. Officials worry that the promise of funded childcare for working families is being eroded by these supplementary charges.

Rick Kelsey, a personal finance journalist, shared his experience on BBC Radio 4’s Today programme, noting that while he was initially enthusiastic about the rollout of government grants last September, he was subsequently faced with daily charges of £16 for items like food and sunscreen. "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 current situation as a "game of smoke and mirrors," noting that many parents remain uncertain about their final monthly bills. However, Kelsey also acknowledged that nurseries are themselves under financial pressure.

Neil Leitch, chief executive of the Early Years Alliance, a representative body for childcare providers, argued that these extra charges are a "cross subsidy" necessitated by years of severe underfunding in the sector. "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," Leitch stated. He criticized the government for raising National Insurance contributions without adjusting the funding rates provided to providers, calling the situation "fundamentally flawed" and asserting that the government is aware of the sector's shortchanged status.

In response, a CMA spokesperson said, "We welcome the request from the education secretary to carry out a review into the early years childcare sector." The agency confirmed it has been monitoring the landscape and is currently developing a specific proposal to present to its board, emphasizing the importance of a sector that functions effectively for families.

The expansion of childcare support has evolved significantly. The previous Conservative government initially offered 30 hours of free care weekly for 38 weeks a year to most working parents of three- and four-year-olds, later extending this to younger children. The current Labour government has further broadened eligibility, providing free care for eligible parents with children from nine months old up to school age. According to Department for Education data, over 1.7 million parents in England are now utilizing these government-funded hours.

Despite these expansions, costs remain a concern. Coram and Family Childcare’s latest annual survey indicates that the average weekly cost for full-time nursery care (50 hours) for a child under two, including funded hours, is projected to be just under £149 in 2026. This represents a 39% decrease from the previous year. For context, the average cost for 50 hours of care for a child under two stands at £259.10 in Scotland and £325.12 in Wales.

The push for this review comes as the government seeks to demonstrate tangible action to alleviate the cost-of-living crisis following poor results in recent local elections across England. With households already facing rising fuel prices and anticipating higher energy and food bills due to supply chain disruptions linked to the war in Iran, the administration is eager to show it is addressing practical financial pressures on families.

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