The Education Secretary, Bridget Phillipson, is set to formally request that the Competition and Markets Authority (CMA) investigate what are being described as 'hidden costs' in government-funded childcare. This comes amid growing concerns that eligible working parents, despite receiving funding for up to 30 hours a week, are still encountering substantial additional charges.
Ministers are particularly worried about demands for non-refundable deposits and extra fees for everyday essentials such as meals, snacks, nappies, and sun cream. These supplementary costs are seen as potentially creating a significant barrier for families attempting to access the childcare they need, thereby undermining the government's commitment to supporting working parents and alleviating cost-of-living pressures. The CMA, an independent non-ministerial department, is tasked with promoting competition for the benefit of consumers.
The issue has been highlighted by parents, with some reporting daily charges for consumables that appear disproportionately high. While the government has significantly expanded its funded childcare offer, now covering eligible children from nine months old until school age, the effectiveness of this policy is being questioned if families continue to face unexpected financial burdens. Department for Education figures indicate that over 1.7 million parents in England currently utilise government-funded childcare hours.
However, the early years sector has also voiced its perspective. Neil Leitch, chief executive of the Early Years Alliance, a membership organisation for providers, suggested that these additional costs function as a 'cross subsidy'. He argued that the sector has been 'grossly underfunded' for many years, implying that nurseries are compelled to levy extra charges to cover operational costs that are not adequately met by government funding rates. Mr Leitch further questioned whether the CMA's focus should instead be on the adequacy of sector funding.
A spokesperson for the CMA confirmed that the body welcomes the Education Secretary's request to review the early years childcare sector. They noted that the CMA has already been monitoring developments in this area and exploring potential work. The authority stated it considers this an important sector that needs to function effectively for families and will now proceed with developing a specific proposal to present to its board.
The current Labour government has expanded the funded childcare provision, building on the previous Conservative government's introduction of 30 hours for three and four-year-olds. This latest move to scrutinise hidden costs reflects the government's broader efforts to demonstrate action on the cost of living, particularly following recent local election results in England and ongoing economic pressures on households.