Nurseries are planning to raise the cost of meals, trips and other extras by at least 10 per cent to cover shortfalls as the Government’s “free” childcare hours are expanded, the sector has warned.
Working parents of children aged nine months to two years will become eligible for 30 hours of state-funded childcare from September, but providers said they are struggling to provide places due to costs that are outpacing available funding.
At the moment, these parents are entitled to 15 hours, and those with children aged three to four years get 30 hours.
But many nurseries have warned that they are planning to increase so-called “top-up fees” for hours that fall outside the entitlement as well as extra charges for meals, snacks, sun cream, nappies or trips, the Early Years Alliance said.
They argue that funding for the 30-hour expansion is insufficient because businesses have been hit by rises to National Insurance contributions and minimum wage.
An annual survey by children’s charity Coram found that annual nursery costs for a child under two will have fallen for the first time in 15 years once the 30-hour roll-out in England is taken into account.
The cost of a part-time nursery place – equivalent to 25 hours – for a child under two fell by 56 per cent over the past year after parents became eligible for 15 hours of state-funded care.
A full-time nursery place for a child under two costs an average of £238.95 per week, down by 22 per cent during the same period, according to the charity.
But Neil Leitch, chief executive of the Early Years Alliance, told The i Paper that while fees may fall, parents should prepare to be hit by a rise in hidden top-up costs from September.
“The more funded hours that are provided to parents, the bigger the shortfall, and therefore all those additional charges that are voluntary have to be revisited,” he said.
“You’re talking about all the charges that relate to food, nappies, sun cream, consumables, trips – anything that falls outside of what the Government have deemed to be part of the entitlement programme.”
Nurseries face increases to employers’ national insurance contributions in April, which are not being covered by public funding, he said.
He added: “Many providers are looking at increasing charges and extras to make it pay. It has to be into double-digit increases.”
Last month, the Department for Education issued updated guidance to nurseries that payment for extra charges must be voluntary and not a mandatory condition to access a funded childcare place.
Top-up fees ‘create two-tier system for nursery care’
But Mr Leitch warned this risks a “two-tier system” emerging at nurseries where children with funded places are unable to go on the same trips as others with wealthier parents.
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Read More“It is the very children that the Government are arguing that they want to support – the most socially deprived, economically deprived children – that are likely to be further marginalised because you will have more closures in areas of deprivation because parents can’t pay for the extras that cross-subsidise the shortfall in funding,” he added.
A survey by the trade body – which represents 14,000 early years providers across England – last week found 59 per cent of childcare settings are likely to reduce the number of places they offer for three and four-year-olds or opt out of offering these funded places altogether due to their costs.
Fees for hours outside the Government-funded provision have already been rising as nurseries seek to cover growing costs.
Prices for parents of three and four-year olds claiming 30 hours a week of funded childcare rose 7.3 per cent in England over the past year, the Coram report found. Prices rose 7.7 per cent for children under two.
A Department for Education spokesperson said: “Giving every child the best start in life is central to our mission to break the unfair link between background and success, and through our Plan for Change, we’ll get thousands more children school-ready by age five.
“That’s why, despite having to take tough decisions to fix the foundations of the economy, we are raising spending on the early years entitlements to over £8 billion next year and we have announced the largest ever uplift to the early years pupil premium, increasing the rate by over 45 per cent compared to 2024-25.
“On top of this, we have recently announced details of a targeted £75 million grant to support the increase to 30 government-funded hours from September, alongside our strengthened guidance to make sure that parents do not face unfair charges to access a place.”
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