Parents face hike in nursery fees as providers struggle to bring in Tories’ free childcare

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Families are being stung by huge rises in nursery fees as under-pressure early years providers struggle to roll out the next stage of Jeremy Hunt’s ambitious scheme for free childcare.

Under what was described as the biggest ever public investment in childcare in England, the former chancellor pledged to provide 30 hours of free childcare for children aged from nine months by September next year.

But on the eve of the second phase of the £4bn rollout, with 15 hours to be given to under-twos from Monday, The Independent has found that underfunded nurseries are being forced to put up prices to stay open and parents are scrambling due to a shortage of places.

Bosses have also introduced additional charges to cover the funded hours for items such as food and nappies.

It means parents are having to pick up a bill for the scheme with a third being told to expect price rises outside funded hours over the next six months, according to a survey by Pregnant Then Screwed.

Three in four also say they are being charged the additional fees on funded hours, with almost a third saying it comes to at least £10 a day.

The rise in fees and additional costs are a shock to many parents who believed they would be seeing greater savings on entering their child into free hours for the first time on Monday.

Have you been affected by the rise in nursery costs or lack of spaces? Email alexander.ross@independent.co.uk

And it comes after a parent survey published by the charity Coram Family and Childcare earlier this year found the cost of full-time childcare at nurseries had already risen across all age groups since last year.

The full-time childcare cost at nurseries for under-twos, according to the report, went up 6 per cent to as much as £14,645 a year across the UK, rising to £20,557 in inner London.

Nurseries have told The Independent that fees have had to increase because funding for the scheme from the government does not cover costs. Earlier this year, 73 per cent of nurseries surveyed by the National Day Nurseries Association (NDNA) said they expected to make a loss or just break even this year.

London parent Chloe Hubbard was shocked to find the cost of full-time childcare at her two-year-old daughter’s nursery in Twickenham was increasing by 9 per cent, to £2,249 a month, in September.

After the 15 hours of free childcare a week was deducted, she still faced a bill of £1,916 – a saving of just £146 a month from August’s payment.

“I couldn’t quite believe it when I saw it going up again on top of our monthly expenses we already struggle with,” Ms Hubbard said. “To have hundreds of pounds put on it; your heart sinks; that’s two weekly shops.

“I don’t know how people not on good salaries like I am are managing because it is financially crippling. You are then trapped because it is hard to find another place elsewhere.”

Partly as a result of the cost of childcare, Ms Hubbard’s family is moving to the south coast where the cost of a nursery will be several hundred pounds less each month.

She added: “I remember the announcement [on the free childcare scheme] and thinking when my daughter turns two I will save all this money and it will only be a short amount of time I’ll be struggling for, but it has turned out to be a facade. I think it is dreadful.”

Mandy Blazey, a bank worker from Henlow in Bedfordshire, has seen nursery fees for her three-year-old son Reuben go up on five occasions since June 2023.

Despite receiving 30 hours of free childcare a week, she pays £1,138 a month following the latest price increase in July, which is under £100 less than she was paying a year ago, when her son did not qualify under the scheme.

Under the childcare scheme, the funding applies for the 38-week school term, so the free hours can be stretched across 52 weeks for a child in nursery all year, meaning it has a lesser impact on monthly bills.

The 34-year-old, whose son is in nursery year-round, said: “Parents can’t simply afford to go back to full-time work because the cost of childcare is too expensive even with the free hours. I believe there are many females out of work who just can’t go back because of money.”

She added: “As a parent of a three-year-old, we are suffering as a result of the rollout as we are having to pay for the deficit between what the government is paying for the funded children and what it costs to run a nursery.

“I have sympathy with the nurseries, but they’re not going to reduce fees. I’m worried it will become unsustainable and nurseries could close because parents will drop out.”

A survey of parents published by the Department for Education in July found one in five parents who chose not to use preschool for their child said it was because they couldn’t afford it.

Six per cent said it was because of a lack of spaces, a figure that looks likely to rise given an accepted shortage of spaces.

On Friday, education minister Bridget Phillipson warned the expansion would not be “plain sailing” with 85,000 new childcare spaces needed by next September.

But it can’t come quick enough for parents like Megan Tremain, who told The Independent she risked losing her television job after being told she could not get her eight-month-old son into her preferred nursery until next April.

The 35-year-old, from Upminster in east London, had tried to get her son in for January but was told several months ago there was no space.

“It’s got busy because of the 15 hours free, which is fine,” she said. “But there needs to be the spaces for the children or we end up in this situation where we can’t go back to work and face losing our careers. It just hasn’t been planned properly.”

Edmund Greaves and Ellyn Sargent Megicks, who live in Bideford, Devon, were able to get their toddler, Cosmo, in childcare for September despite a scramble for places in their local authority area, Torridge, which has the fewest childcare places per 100 children, according to the latest Office for National Statistics figures.

However, they’ve had to share the care between a nursery and a childminder because of the demand.

“We first had a place booked with a childminder but it got cancelled due to the rise in children,” said Mr Greaves, a financial journalist. “We panicked when we started calling round and found many, including a new one nearby, to be full.

“We ended up getting lucky but have had to combine nursery with a childminder due to spaces. It’s alright giving away free hours but there needs to be a check on supply. It was like a lottery finding a place.”

Rhiannon Woods, a teacher living in Keynsham near Bristol, applied for a place for her 22-month-old son, John, when she was still pregnant, but due to a shortage of childminder and nursery spaces in the area, she could only get a part-time place at a childminder and had to cut her hours at work.

She paid around £500 a month for her son to be looked after two days a week ahead of next month.

“Where do people find the money?” she said. “When the money comes in it goes straight back out. I wonder how other people do it even with the free hours coming in, there’s still so much to pay out.”

Funding for the free childcare scheme is provided by central government through councils which distribute at least 95 per cent of the cash to providers. For under-twos, councils on average get £11.22 per hour, for two-year-olds £8.28 per hour and for three- and four-year-olds £5.88 per hour.

Early Years Alliance chief executive Neil Leitch told The Independent the funding was “far short of what was needed” with nurseries forced to increase prices and introduce additional fees for items such as food and nappies.

He added: “Nurseries, childminders and preschools are doing their best both to deliver enough places to meet demand and to ensure that costs are affordable for parents, yet under the expansion this is an uphill battle which is only getting steeper.”

At Mericourt Nursery in Preston, owner Barkha Rani put up hourly prices for children by 10 per cent in April but she is still oversubscribed for September, having turned around 50 parents away.

She now has a waiting list for January next year, and for next April.

Ms Rani said costs increased because of the rise in the minimum wage in April and additional staffing required to cover the surge in the number of under-twos at the nursery, with younger children requiring a lower staff ratio.

She said: “Some parents, they know the prices will rise but with others it is hard because you see how it impacts them.”

The NDNA said the funding of free childcare places had been historically lower than the nursery costs, with its survey earlier this year revealing 83 per cent of providers saying the hourly rate for three- and four-year-olds was not enough.

It calculated that the hourly shortfall between government funding and the cost of childcare was £2.36 for three- and four-year-olds and £1.69 for two-year-olds.

Chief executive Purnima Tanuku OBE said: “It is important for parents to know that the funded support does not make childcare free. These places are not fully funded and have never been free for either providers or parents”

With a 1,400 drop in the number of childcare providers from March 2023 to March this year, a report by the Local Government Association published last week found 25 per cent of authorities were not “very confident” they had enough spaces for the rollout of free childcare spaces on Monday.

The Department for Education described the challenge of the rollout of free childcare as “substantial”, adding more nurseries will be opened out of primary school classrooms to provide the needed spaces.

Education secretary Bridget Phillipson said: “This inherited plan comes with significant delivery challenges – I must warn that for some parents it will not be plain sailing – and while I am excited to see children starting nursery for the first time, or parents being able to increase their working hours, the work for government starts now.

“Over the next year, I will be working flat out with my team to ensure the next phase of the rollout is possible – doubling parents’ childcare entitlements to 30 hours a week.”