The government’s plan for childcare expansion in England, which promises 30 hours of free childcare per week for working parents, could ironically leave some families paying more, according to a new study. While the policy aims to save parents thousands of pounds annually, researchers warn that insufficient funding and rising nursery costs may undermine the initiative’s benefits.
Government’s 30 Hours of Free Childcare
From 1 September, eligible working parents of children aged nine months to four years will gain access to 30 hours of free childcare during term time. Education Secretary Bridget Phillipson said this would save families an average of £7,500 a year, easing the financial burden of childcare across England.
The move is hailed as the largest expansion of free early years care ever introduced in the UK. However, concerns have surfaced over how well it is funded and whether nurseries can sustainably deliver the promised hours.
Study Highlights Flaws in Funding Model
A joint study by the University of Bradford and the University of Bath revealed that government funding is not keeping up with actual nursery costs. It found that in many regions, the amount allocated per child is lower than the average hourly nursery fee. As a result, nurseries are compensating by raising fees for unfunded hours, which risks wiping out the savings families were expecting.
Kerry Papps, professor of economics at the University of Bradford, said the increased competition for nursery places could push up costs even further. “Demand could push up prices for unfunded hours, wiping out savings for families who need them most,” he explained.
The research showed that in the past 18 months, nursery fees had risen fastest in areas where government funding was lowest, highlighting systemic challenges.
Nurseries Facing Financial Pressures
Many nurseries are already struggling with financial sustainability due to underfunding, staff shortages, and rising operating costs. Neil Leitch, chief executive of the Early Years Alliance, which represents 14,000 nurseries and childminders, said the issue stems from “gross underfunding.”
He noted that even the previous government admitted to underfunding childcare by around 30%. With added expenses such as National Insurance hikes and business rates, providers are finding it increasingly difficult to balance their budgets.
“Providers will do their utmost to support families,” Leitch said, “but unless funding adequacy is addressed, long-term sustainability is questionable.”
Sector Voices Concern About Sustainability
Sarah Ronan, director of the Early Education and Childcare Coalition, echoed these concerns, warning that the sector operates under immense financial strain. Rising employment costs, operating costs, and insufficient funding make it difficult for nurseries to maintain quality services while meeting increased demand.
Similarly, Karen Simpkin, who runs the Sunflower Children’s Centre in Sheffield, said nurseries face financial stress not only from staffing but also from building upkeep and business rates. “I pay £15,000 a year in business rates,” she said, adding that some nurseries in other areas pay even more. “Where does that money come from if funding does not match costs?”
Government Response and Future Plans
The Department for Education has defended its policy, stating that investment in early years will increase to more than £8 billion next year. A dedicated £75 million expansion grant has also been introduced to help providers deliver the expanded 30 hours of government-funded childcare.
Officials argue that the initiative will support working families and strengthen early years education. However, experts caution that without addressing underlying funding gaps, the benefits of the policy could be unevenly distributed and leave many families worse off.
Why Childcare Expansion Matters for Families
Childcare expansion has been positioned as a major step toward reducing parental financial stress and encouraging workforce participation, especially among mothers. Affordable and accessible childcare not only benefits families but also contributes to economic growth by enabling more parents to work.
But if nurseries continue to raise fees for unfunded hours, the expected savings may vanish. For many low- and middle-income families, that could mean paying more despite promises of relief.
