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PARENTS hoping for relief from sky-high childcare bills could be hit with higher costs, according to a worrying new study.
The Government’s free childcare expansion is not keeping pace with nursery fees and could cause them to rise in some areas, according to new research from University of Bath Institute for Policy Research.
The study tracked prices over the past 18 months and found that nursery fees have risen fastest in areas with the lowest government funding.
In “childcare deserts”, where three or more children compete for every available space, the surge in demand from expanded entitlements risks pushing up the price for the hours parents still pay for.
In most of England, funding for three and four-year-olds is lower than the average hourly fee, which forces nurseries to plug the gap by charging more for younger children.
Meanwhile, in the year to March 2025, nurseries in the worst-funded half of the UK raised their fees significantly more than those in better-funded areas.
Read more on free childcare
London is still the most expensive area for childcare, followed by the South East and South West.
In comparison, the North East is still the cheapest region for childcare.
University of Bradford Professor Kerry Papps, who co-authored the study, warned that unless funding keeps pace with nursery fees, the policy could backfire.
She said: “In childcare deserts, the extra demand may push up prices for unfunded hours, wiping out savings for families who need them most.”
Meanwhile, analysis of one of the UK’s largest nursery chains, which has around 300 sites, showed its price broadly matched competitors, which suggests it is a national rather than isolated issue.
The team said it will continue to track the impact as the final phase of the policy is rolled out in September 2025.
Expansion of free childcare
The Department for Education is rolling out more free childcare for working families.
From September, parents can access up to 30 hours of childcare for children aged nine months up to four years.
The rollout of the extra hours is the final phase of a three-part expansion.
The first phase began in April 2024 and allowed eligible working parents of two-year-olds to apply for 15 hours of free childcare.
Who’s eligible for free childcare hours?
YOU could get up to 30 hours of free childcare per week through the Free Childcare for Working Parents scheme if you meet these conditions:
- Child’s age: Your child must be between 9 months and 4 years old and live in England.
- From September 2025: All children aged 9 months to 2 years will qualify for 30 free hours per week.
- Income: Each parent must earn at least £166 per week (equal to working 16 hours at minimum wage) and no more than £100,000 per year.
If you’re not eligible for the 30-hour scheme, you can still get 15 free hours per week for all 3 and 4-year-olds, starting from the term after their third birthday until they begin school.
This is available to everyone, regardless of income or benefits.
Your 2-year-old can also get free childcare if you live in England and meet any of these conditions:
- You receive benefits like Income Support, income-based Jobseeker’s Allowance (JSA), income-related Employment and Support Allowance (ESA), or Universal Credit (with a household income of £15,400 or less after tax, not including benefit payments).
- You get the guaranteed element of Pension Credit.
Your child is also eligible if they:
- Are in the care of a local authority.
- Have an education, health, and care (EHC) plan.
- Receive Disability Living Allowance.
- Have been adopted or are under a special guardianship or child arrangements order.
Taking up the 15 free hours for 2-year-olds won’t affect your benefits
In the second phase in September 2024, 15 hours of free childcare was extended to eligible working parents of children aged nine months to three years old.
The expansion was announced by the previous Conservative government during its 2023 Spring Statement.
Previously parents could only claim 15 free hours for three and four-year-olds in England.
The Government has said parents using the full 30 hours from next month will save around £7,500 a year.
It’s worth noting that you can only get the free childcare hours if you are classed as a “working” parent.
To meet this criteria you need to earn more than £9,518 but less than £100,000 a year.
If you’re in a couple then you must both earn at least £9,518 and neither of you can earn more than £100,000 adjusted net income.
This is the total taxable income, including rental income, salary and money from freelance work.
For more information visit the Childcare Choices website at childcarechoices.gov.uk.
How to apply
Families in England can apply for the hours through the gov.uk website.
This should take around 20 minutes to complete, according to the Government’s website.
You need to set up a childcare account and provide some personal information such as your National Insurance number and Unique Taxpayer Reference (UTR) number if you are self-employed.
You will also need the UK birth certificate reference number (if you have one) of the child you are applying for and the date you started or are due to start work.
If your application is approved then you will be sent an 11-digit code that proves you are eligible.
You then need to give this code to your childcare provider.
To keep getting the hours you need to confirm your details are correct every three months via your childcare account.
For more information go to gov.uk/free-childcare-if-working.
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