Education Secretary Bridget Phillipson has announced a competition review of hidden childcare charges, targeting practices such as nonrefundable deposits and compulsory add-ons that burden parents. The move comes after widespread reports of families facing unexpected costs to secure nursery places for their children.
Review of Hidden Charges
In a letter to the Competition and Markets Authority (CMA), Ms Phillipson requested an investigation into additional fees that parents are often required to pay, including upfront deposits, extra paid hours, and charges for basics like nappies, meals, and sun cream. The government stated that too many parents are still being asked to pay these extra costs despite the availability of funded childcare hours.
Expert Insights
Tom Smith, former legal director of the CMA, commented to the Financial Times that the regulator is focusing on sectors with significant household spending. "They've recently investigated the vets sector, they're currently investigating private dentistry, and now childcare is next," he said. "The CMA's goal will be to assess whether the private childcare sector is working well for consumers." He added that the watchdog has "very wide powers to impose changes on the sector, including divestments and structural measures, and significant changes to business practices," and often recommends legislative changes.
Impact on Parents
The Department for Education (DfE) noted that "too many" parents have reported being asked to pay more to secure a funded place, including waiting-list deposits and compulsory add-ons. Neil Leitch, chief executive of the Early Years Alliance, described this as a "cross-subsidy" on BBC Radio 4's Today programme. One parent, Rick Kelsey, wrote in the Times last year that up to £16 per day—amounting to thousands of pounds annually for a child in full-time nursery—was being charged on top of standard fees.
Government Response
Ms Phillipson stated that "too many parents are still not feeling the full benefit" of government-funded childcare hours. She told the Guardian: "The vast majority of nurseries and childminders are doing a brilliant job – but we have to ask hard questions every time we hear stories of families hit with hidden charges, restricted hours or excessive deposits that bear no relation to what parents are actually paying. That is not what this investment was meant to deliver."
CMA Statement
A Competition and Markets Authority spokesperson said: "We welcome the request from the education secretary to carry out a review into the early years childcare sector. The CMA has been monitoring developments and exploring the merits of work in this area. This is an important sector that needs to work well for families, and we will be developing a specific proposal to put to our board."
