Free childcare expansion could lead to higher nursery costs, study warns
The study found that where funding is lower, prices are rising faster for the hours parents pay for
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The government’s plan to expand free childcare could leave some parents paying higher nursery fees, a new study has found.
From 1 September, working parents of young children will have access to 30 hours a week of childcare during term time, paid for by the government.
The government said the scheme, which covers children from nine months until reception, will “support more children to be ‘school-ready’ and set them up to achieve better results in school”.
However, a study from the University of Bradford and University of Bath found that the funding was not keeping pace with rising nursery prices, and 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 place, the surge in demand from expanded entitlements could risk driving up prices for the hours parents still pay for, the study warned.
The study found that in most of England, funding for three and four-year-olds is lower than the average hourly fee, “forcing nurseries to plug the gap” by charging more for younger age groups.
Meanwhile, between March 2024 and March 2025, nurseries in the worst-funded half of the country raised fees “significantly more” than those in better-funded areas.
In addition there were “sharp” regional divides, as London remains the most expensive region for childcare, followed by the South East and South West, while the North East is cheapest.
Professor Kerry Papps, study co-author and Professor of Economics at the University of Bradford, said: “Unless funding keeps pace with nursery costs, the policy could backfire. In childcare deserts, the extra demand may push up prices for unfunded hours, wiping out savings for families who need them most.”
Dr Joanna Clifton-Sprigg, University of Bath and study lead researcher, added: “Free childcare is a bold and welcome move but without funding that reflects real costs, it risks falling short.
“Where funding is lower, we’re seeing faster price rises for the hours parents pay for, a pattern that could deepen regional inequalities.”
The study used monthly price data from March 2024 to March 2025 from a large UK nursery chain, comparing it with the Department for Education’s 2024 Childcare and Early Years Provider Survey and prices from nearby nurseries.