When ‘free’ childcare isn’t actually free!

Eligible working parents of children aged between nine months and four years old in England are entitled to 30 hours per week of government-funded childcare. More than 1.7 million parents in England use these childcare hours, according to Department for Education figures. Parents who have childcare costs over and above the funded hours can, in some cases, access financial support through Universal Credit or Tax-Free Childcare.

However, a significant proportion the families only accessing ‘free’ provision have seen an increase in charges through having meet the cost of meals, snacks, nappies, outings and suncream and in some cases having to pay non-refundable deposits just to secure their child’s ‘free’ place. A recent report from Coram Children’s Charity has highlighted the additional costs that many parents have to pay when they are accessing the government’s ‘free childcare’. The government has asked the Competition and Markets Authority (CMA) to review this practice to ensure that parents are being treated correctly in the application of these additional fees.

Why are additional fees being charged?

The reason for the additional costs is that there is clear evidence that funding provided by the UK Government for the delivery of free childcare hours in England does not cover the full costs of childcare providers offering the scheme. As a result, there is a shortfall in funding that providers must cover. The consequence is that childcare providers have to increase their costs for families accessing childcare outside the funded hours and for the ‘extras’ as mentioned above. Last year Childcare professionals representing more than 6,060 settings signed an open letter to the Department for Education calling for a better deal for providers and parents.

In addition, some parents are not aware beforehand that the 30 hours offer is based on a school term-time schedule, rather than a working parent’s schedule. This means that the full entitlement to 30 hours of free childcare per week is only available across 38 weeks of the year and while it can be ‘stretched’ across the whole year, this significantly reduces the number of ‘free’ hours that can be accessed each week.

This has made it even more difficult for many parents, particularly mothers, to afford the childcare they need to return to work following the birth of a child, and for families who are accessing free childcare during term time but then have the significant extra costs during the school holidays.

What is the average cost of childcare?

 The average cost of a full-time, 50 hours per week, nursery place for a child under two in England including the funded hours is just under £149 per week in 2026, according to the Coram annual childcare cost survey. That is a 39% drop from last year, reflecting the expansion of the 30 hours free childcare to cover that age group. The average cost for 50 hours a week for a child under two was £259.10 in Scotland and £325.12 in Wales.

The most recent Northern Ireland Childcare Survey, carried out in 2024 by the NI Statistics and Research Agency (NISRA), reported that the average childcare costs are £630 per month (£145 per week) when parents are paying for 31-40 hours of childcare, not the 50 hours that the Coram surveys use. As the Coram and NISRA surveys use different methodology this makes direct comparisons difficult, however it does appear from the figures that ‘full-time’ childcare costs in Northern Ireland are more expensive than those in England but may be cheaper than those in Scotland or Wales.

Northern Ireland does not have the equivalent ‘free’ childcare hours, the NI Executive instead funds the Northern Ireland Childcare Subsidy Scheme which provides a 15% reduction in registered childcare costs for working parents who are also using Tax-Free Childcare.  Alternatively eligible parents may be able to access support for childcare costs through Universal Credit.

For confidential advice and information on what may be the best form of support in your particular household circumstances contact the Family Benefits Advice Service at fbas@employersforchildcare.org.