An expansion of the government’s centrally funded childcare scheme has created unforeseen costs for thousands of families in England. Not surprisingly, some parents have already experienced fee drops. For others, the reality is they’re facing increasing expenses and challenges in locating affordable, accessible childcare. The program’s goal was to provide creative, cost-effective solutions yet it’s currently under attack. An acute shortage of providers and a lack of enough funding to provide quality care are top concerns.
Alec, a father of one, told us that his monthly childcare cost is still £1,668.92 even under the extended scheme. At least he was able to get a 55% reduction in his fees, thanks to the extra funded hours. Many families are not so fortunate. Increased costs and a lack of available childcare providers have driven many nurseries to stop accepting the free hours parents are entitled to. As a consequence, parents are forced to pick up more of the bill.
In one case, a school-operated nursery, the waiting list is over two years long. This interaction is typical of the increasing shortage of childcare access, something many mothers and parents want but can’t afford. Roo, a mother seeking care for her child, stated, “Increased funded hours mean nursery prices in our town have all risen, to cover the [funding] shortfall.”
It showed that nurseries are introducing fee hikes of up to 10% on average to compensate for surging employment costs. With the average turnover creating about an 8% hike in September 2025, this is adding insult to injury to stretched wallets.
“Following Rachel Reeves’s increase in employers’ national insurance, childcare providers nationwide have raised their fees,” – a spokesperson for NDNA.
Despite the government’s intention to support families through this childcare expansion, many parents like Jennifer remain frustrated with the limited options available to them. She described her experience: “The nursery my child attends is simply not offering the free hours. They have a waiting list of over two years as they are popular but more importantly there is an acute shortage of providers.”
The bitter issue of underfunding has been a long-standing grievance between early years providers. Providers are deeply concerned that the government’s funding does not cover the true operational costs of providing childcare. This has led childcare providers to either eat the cost or increase costs elsewhere. This picture was made all the clearer by Amy who told us that their nursery can only take 20 of the 30 funded hours because of funding cuts.
“While we qualify for the 30 funded hours, our nursery can only accept 20 of them due to funding shortfalls that fail to cover their operating costs,” – Amy.
The shortfall has resulted in many families incurring higher costs overall even though they qualify for free hours. Jennifer expressed her frustration about the steep increase in fees: “Our fees went up by 30% in April, an increase of £330 per month. It certainly doesn’t seem fair that we are paying [more] for something we’re ineligible to use.”
With greater demand for nursery care, the flexibility of nurseries has vastly reduced. Parents are telling us their choices are fewer and many have ended up having to accept more inconvenient ones. One parent noted, “After phoning 15 nurseries I was only offered a Friday afternoon, which is the only time I don’t work.”
By 2027/28, this expansion of the funded childcare scheme is projected to have an annual cost of £4.1 billion per year. Total expenditure on early years entitlements will increase to just under £8 billion. Critics say that this funding is inadequate and misguided.
“The scheme is poorly thought out and barely scratches the surface. This is a systemic issue that desperately needs addressing,” – Amy remarked.
The impact of these funding shortfalls are more than financial. They’re keeping parents from going back to work. Millions more have had to make difficult decisions about their jobs forced by the sudden and complete absence of any childcare resources. Jennifer’s husband took time from his own career to raise his wife up. This helped her return to work while they await placement for their son.
“I wish politicians would take a longer view and tackle this properly, rather than this sticking plaster which might make a good headline,” – Jennifer stated.