Costs for childcare have decreased by 56%, but not for everyone

Since the implementation of free childcare assistance last year, the cost of childcare for children under three has been cut in half, although some individuals continue to pay more

Following the government's implementation of free childcare hours for children under three, families in England have witnessed a notable decrease in childcare expenses in the first year.

However, as the industry struggles with growing expenses and a growing funding gap, some working parents are being left behind while others are benefiting.

According to the most recent Coram Family and Childcare survey, the average weekly cost of part-time nursery care for children under two has decreased by 56% in the last 12 months, arriving at 70.51.

On average, full-time nursery spots for children under two now cost 238.95 per week, a 21.5 percent decrease. However, the average fee for two-year-olds working 50 hours per week has decreased by 226% to 22570%.

"The new entitlements are a very welcome step towards making childcare affordable for working parents and easing the difficult choices around work and care that parents have faced for many years," says Lydia Hodges, head of Coram Family and Childcare. "This year's survey just shows how different the picture can be for families with funded support from the government."

The operation of the free childcare program.

The government's new funding for working parents is the main factor behind the significant decline in childcare expenses.

Eligible working parents with children under the age of two have been eligible for 15 hours of paid childcare per week since April 2024. For kids nine months and up, this was extended to include 15 hours of free childcare starting in September of last year.

Children under five who have working parents will be eligible for 30 hours of free childcare per week starting in September 2025.

When the program was first implemented, the government celebrated it as a revolutionary change in childcare policy that would guarantee that diligent parents would receive the assistance they were due.

A two-level structure?

But not everyone will be happy with the news. The average nursery costs for families who do not meet the requirements for government-funded childcare, such as not being employed, earning insufficient income, or not meeting other eligibility requirements, have increased dramatically.

The average cost of sending a child under two to nursery has increased by 105 per week for parents who do not receive government assistance, while the cost of sending a two-year-old has increased by 100 per week.

According to Neil Leitch, CEO of the Early Years Alliance, "it is good that early years places are getting cheaper for families who qualify for funded places, but it's evident from today's findings that the early years sector in England is quickly becoming a two-tier system."

A growing number of children from underprivileged backgrounds, who we know benefit the most from early education and care, are in danger of being denied access to affordable places because the majority of early entitlement offers are biased towards working families.

"There's no denying that under the current system, the children who need support the most are now the ones who are least likely to be able to access it, especially when you consider that children with special educational needs still have a harder time getting it than their peers.

For children with special educational needs and disabilities (SEND), the issue is even more severe; less than one-third of local authorities report that there are enough spots for at least 75% of the SEND children in their community.

Costs are rising in Scotland and Wales.

Parents have witnessed price increases in Scotland and Wales, where the new entitlements are not in effect.

The cost of childcare for children under two has increased by 69% in Scotland and 97% in Wales.

"To guarantee that every child has the best start in life during their crucial early years, the system needs to be rebalanced," Hodges says. "Many children with special educational needs and disabilities are still having difficulty finding a place, and parents who are not eligible for the entitlements are unlikely to be able to afford the cost of providing their children with the same amount of early education that other children receive for free.

Nurseries face funding shortfalls.

Nurseries are having trouble even though some parents' expenses have decreased.

According to data from Ofsted, during the previous six years, the number of early years places has decreased in 70 out of 149 local authorities in England.

As childcare providers pass on the rise in employers' National Insurance Contributions (NICs) and other operating expenses, fees outside of the funded hours are also increasing.

Joeli Brearley, founder of Pregnant Then Screwed, says, "After years of unrelenting increases, childcare costs are finally declining, which is a milestone worth celebrating." "However, there are obstacles to this advancement. SEND provision is still dreadfully insufficient. The cost of National Insurance will increase outside of funded hours due to hikes, and families could become stranded due to an impending shortage.

Many nurseries may decide not to offer funded hours at all since the actual cost of care is not covered by funding. Although reduced fees are a positive development, accessibility and quality are still at risk in the absence of additional funding.

What comes next?

To stop inequality from growing, early childhood experts are calling on the government to take additional action.

Brearley claims that "Labour repeatedly promised to prioritise the early years." They only made token mention of its vital role in fostering a strong economy and enhancing children's outcomes. There is absolutely no indication that childcare and early childhood education are being given priority now that Labour is in power.

In order to guarantee that every child has equal access to childcare, recommendations include doing away with work requirements. A workforce strategy is required to increase the hiring and retention of nursery employees. Additionally, SEND funds are ring-fenced to guarantee that kids with special needs are not overlooked.

"This year, we asked parents about their opinions and experiences with childcare for the first time, and many of them emphasized the positive impact that it has had on their child's independence, development, and happiness," says Hodges.

"We demand that the government take both short-term and long-term steps to ensure that no child is denied this crucial improvement in their results. These are things we want for all children.