Education Secretary Bridget Phillipson is set to ask the Competition and Markets Authority (CMA) to investigate hidden costs that parents face when accessing government-funded childcare.
The previous Conservative government introduced 30 hours of state-funded childcare per week for most working parents of three- and four-year-olds in England, later extending eligibility to parents with children as young as nine months. However, many families still encounter unexpected charges, such as non-refundable deposits and fees for meals, snacks, nappies, and sunscreen.
Ministers are concerned these additional costs create barriers for hard-pressed parents and undermine the intended benefit of the funded hours. The CMA, which promotes competition and protects consumers, will be asked to examine the issue, as first reported by the Financial Times.
Personal finance journalist Rick Kelsey told BBC Radio 4's Today Programme that he was initially "excited" about the new grants but ended up paying £16 per day for consumables like food and sunscreen. "I'd love to see a toddler eat £16 worth of chicken nuggets and Babybel in a day," he quipped, adding that many parents "don't know what their bill will be at the end of the month."
Neil Leitch, chief executive of the Early Years Alliance, argued that the extra charges represent a "cross subsidy" because the sector has been "grossly underfunded" for years. He questioned why the government doesn't ask the CMA to examine whether providers receive adequate funding, pointing to increased National Insurance contributions that were not reflected in the rates paid to nurseries.
More than 1.7 million parents in England now use government-funded childcare hours, according to Department for Education figures. The average weekly cost of full-time nursery (50 hours) for a child under two, including funded hours, is just under £149 in 2026—a 39% drop from the previous year, per Coram and Family Childcare's annual survey. In Scotland and Wales, the average costs are £259.10 and £325.12, respectively.
The move comes after poor local election results for the government in England, and as households face rising fuel, energy, and food prices. Chancellor Rachel Reeves recently announced a "Great British Summer Savings" campaign, including reduced VAT on family attractions and free bus travel for under-16s in August.