SOARING nursery costs are under review by the Government as it warns action will be taken over widespread “unjustifiable” childcare hikes, The Sun can reveal.
In an exclusive interview, David Johnston, minister for children, families and wellbeing, said the Government is collecting examples of large price hikes and will assess whether it needs to take action if it finds providers are charging too much.
It comes as a recent survey of over 11,000 parents by charity Pregnant Then Screwed found 70% saw their costs increase this spring, with a fifth of those seeing them rise by at least 11% – far above inflation.
And an investigation by The Sun last month found parents had been stung by shock new fees coinciding with the rollout of extra free childcare hours, despite this being against government guidance.
But nurseries argue that the funding provided by the Government doesn’t cover the cost of offering free places and they are also grappling with rising costs due to inflation.
Mr Johnston said: “There is an issue with occasional instances I have been told about where fees have been put up by far too much.
“Every example like that I’ve been sharing with officials here so they can collate the data and see whether it’s a bigger problem.
“We’re keeping it under review and will see if any action needs to be taken by us if there are widespread hikes in fees that are not justified by the costs.”
Last month, the Government introduced 15 hours of free childcare a week for working parents of two-year-olds.
Applications open this month for parents of nine-month-olds to claim 15 free hours from September.
It is part of a plan to offer 30 hours of free childcare to all eligible parents of children aged between nine months and three years by September 2025.
Wales, Scotland and Northern Ireland have their own schemes.
The Government is providing funding directly to childcare providers instead of parents paying themselves, and has said in its guidance for nurseries that free childcare hours must not have any other compulsory fees attached.
However, our investigation last month found a number of nurseries had brought in compulsory fees for food, trips and other admin costs at the same time that extra free hours were introduced.
In one email from a nursery near Woking in Surrey, seen by The Sun, parents were told they must start paying a new £29 daily “consumables charge”, even if they were only claiming free childcare hours.
They were also told to pay a £55 “non-refundable registration fee” just for registering for the free hours.
ED and Amy Fraser, from Reading, noticed their two-year-old's nursery fee rose significantly when the extra hours of free childcare kicked in last month.
The couple, who run their business The Parent Money Coach together, saw their nursery fee jump 9% in April from £69 to £75 per day.
They now estimate they are only £4 better off overall when factoring in the new free childcare hours, compared to before the latest price rise.
Ed, 39, said: “Despite the free childcare hours kicking in, we have still had a rise in our daily rate which happened at the same time.
“We are marginally better off, but only by about £4, which doesn’t feel like a huge amount of financial support.
“I’m glad the Government is looking into this, but I’d also like them to try and fix the issue of waiting lists and lack of capacity too.”
Another parent with a daughter at a nursery in Huddersfield, who only claimed free hours, said she had never been asked to pay for consumables before.
But in her April invoice, her nursery requested an extra £61, which she was told was a compulsory consumables fee.
Nurseries are allowed to charge fees for these extras, but as part of its latest guidance, the Government has warned they cannot make them a condition of accessing a free place and they must be optional.
Mr Johnston said: “Our rates are not designed to cover the cost of nappies or trips or that sort of thing, so if providers are transparent about exactly what the charge is for and are clear it is optional, as parents have to be able to access the place free of charge, that is ok.
“What’s not ok is applying a compulsory fee where parents all think they have to pay it, or where they don’t know what they’re paying for.
“Where we are seeing this sort of thing, we are making sure to take it up with the local authority. It’s absolutely something we’re keeping under review.”
Are you facing rising nursery fees? Tell us by emailing money-sm@news.co.uk. Let us know what you paid before and what it’s increased to, as well as where you live.
Nurseries have previously warned that they may have to increase fees or close as a result of the rollout of extra free childcare hours.
This is because they say the Government doesn’t provide as much funding as they could charge parents directly.
A survey of around 1,200 childcare providers by the Early Years Alliance in February found 60% said they were set to receive less in funding than the cost of delivering free places.
And last month, childcare group London Early Years Foundation said the funding it was getting was “insufficient”.
When The Sun asked Mr Johnston about this, he insisted the amount the Government provides is “very generous” and even higher than they would claim from parents.
He added: “Parents need to know that through our survey of providers and parents, we know exactly what people are facing cost-wise and how we are meeting that in what we give.”
The Government said last month it was set to pay nurseries £204million to ease financial pressures including staffing costs and other bills.
All eligible parents are able to claim either 15 or 30 hours of free childcare, depending on the age of their child.
To be eligible, you and any partner must both expect to earn at least £183 per week, equivalent to 16 hours per week at the national minimum wage.
You must also both earn less than £100,000 of adjusted net income.
Anyone on maternity, paternity or adoption leave or who is unable to work due to disability or caring responsibilities could also still be eligible.
To find out if you can claim and start your application, visit gov.uk/apply-free-childcare-if-youre-working.
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