Hidden Childcare Costs, What the CMA Review Means for Families

The government's flagship childcare expansion was meant to end the affordability crisis for working families. Eligible parents of children aged nine months and older can now access 30 hours of funded childcare per week, a commitment the government says saves families up to £8,000 a year per child. More than 500,000 children are now accessing those places.

But across the country, many parents say the promise is not matching the reality. None refundable deposits to secure a place. Compulsory charges for nappies, suncream, and meals. Requirements to book additional paid hours as a condition of accessing the funded entitlement. The government says these practices are unacceptable. On 26 May 2026, Education Secretary Bridget Phillipson wrote directly to the Competition and Markets Authority (CMA) asking it to examine whether the childcare market is functioning in the interests of families or against them.

What the 30 Hours Offer Is and Where It Falls Short

Following the completion of the funded hours expansion in September 2025, eligible working parents of children aged nine months and older are entitled to 30 hours of government funded childcare per week over 38 weeks a year. The government estimates this saves eligible families up to £8,000 annually per child.

The entitlement is real, and for many families it has made a genuine difference. But the funded rate paid to providers set by government has consistently been described by the sector as below the actual cost of delivering care. That gap, providers argue, forces them to cover costs elsewhere.

How Hidden Costs Appear in Practice

Government data and surveys paint a picture of charges that chip away at the value of the entitlement:

• None refundable deposits: Some providers ask parents to pay upfront deposits, sometimes hundreds of pounds to secure a place, even for a child who will later use funded hours.
• Consumables charges: Fees for nappies, suncream, sun hats, meals, and snacks are being passed on to parents at some settings, even when those items might be considered part of ordinary childcare.
• Compulsory extra hours: Some providers will only offer the funded entitlement as part of a package that includes additional paid hours. Parents who cannot afford or do not need those extra hours are effectively locked out.
• Waiting list fees: Charges to remain on a nursery waiting list have been reported, adding a cost even before a child has started.

According to the government, nearly three quarters (72%) of parents say they are using savings to cover extra charges on top of their funded hours. More than one in four (27%) say cost remains the biggest single barrier to accessing the childcare they need.

What the Education Secretary Has Asked the CMA to Do

In her letter to CMA chief executive Sarah Cardell, dated 26 May 2026, Bridget Phillipson set out a formal request for the CMA to conduct a review of the early years childcare market. While the CMA is independent and will determine the scope of any work it takes on, the letter identifies specific areas of particular concern.

Phillipson asked that the CMA engage closely with departmental officials throughout any review and deliver a final report by Spring 2027, in time to inform the first phase of the government's broader Childcare Review which was announced at Autumn Budget 2025.

The Private Equity Question

The inclusion of private equity in the CMA's scope is politically significant. Campaign group Pact (Parents and Carers Together) and advocacy organisation Growth Spurt have both raised concerns that profit extraction by large corporate childcare groups is diverting money that could otherwise improve the quality and affordability of care.

Joeli Brearley, director of Growth Spurt, said the government would be investigating whether investor owned chains are using taxpayer funded childcare as a vehicle for profit rather than for children's benefit and described the move as "a huge relief."

The New Tools Being Launched for Parents

Alongside the CMA letter, the government announced two practical measures aimed at helping parents navigate the system right now, while the longer review takes place.

The Free Cost of Living Childcare Tool

A new free tool, accessible via the Best Start in Life childcare checker at childcare.beststartinlife.gov.uk, is designed to help parents find local provision, understand what they are entitled to, and plan the costs involved. The government says it is also designed to help parents identify when they may be being charged for things they should not have to pay.

The Local Childcare Map

A trial of a new interactive map of local childcare provision is launching first in Bristol, South Gloucestershire, and Bath and North East Somerset. The map is intended to help parents find funded places near them, and to increase the visibility of local nurseries and childminders who may currently struggle to reach parents who do not know they exist. A national rollout is expected later in 2026.

Why This Is Happening Now

The government's childcare expansion has been the centrepiece of its family policy since taking office. Alongside the expansion of funded hours, it has introduced free breakfast clubs in primary schools, extended after school care, and made significant investment in early years places. The combined offer is framed as one of the most substantial improvements to family support in a generation.

But the hidden costs issue has proved persistent. The fundamental tension is that the government sets the funding rate paid to providers, and many in the sector say that rate does not cover the full cost of delivering care. Providers operating in less affluent areas where parents are less able to buy additional paid hours face particular pressure. Some charge extras to stay viable. Others, critics argue, do so simply because they can.

Phillipson acknowledged the majority of providers are "brilliant" and operating fairly. Her letter to the CMA draws a clear distinction between providers who charge reasonable supplementary fees to remain sustainable and those who are, as she put it, "letting families down and stopping them get what they were promised."

The CMA will now decide whether and how to take forward the review request. As an independent body, it is under no obligation to follow the government's suggested scope exactly, though ministerial requests of this kind typically carry weight. If it agrees to proceed, parents, providers, local authorities, and childcare chains can expect to be asked to give evidence.

A final CMA report is expected by Spring 2027. That report will feed into the government's own Childcare Review, which is looking at how to simplify the system for providers and families and improve the overall impact of the government's offer. Any changes to how the market is regulated, or to the funded rate paid to providers, would flow from that wider review process.

For parents dealing with unexpected charges right now, the new cost of living tool is available immediately, and the local childcare map trial is live in the South West. Neither replaces structural change but they are intended to help families understand their rights and make better informed choices while the longer process plays out.