Free Childcare Could Increase Costs for Parents: Study.

According to The Sun: Parents hoping to reduce childcare costs through high prices may face even higher expenses, according to a new study.

The expansion of free childcare by the government is lagging behind the rapid increase in costs at nurseries, which could lead to higher fees in some regions, according to the study by the Institute for Policy Studies at the University of Bath.

The study documented prices over the last 18 months and found that costs at nurseries in the most poorly funded regions have risen the most.

Rising Childcare Costs

In 'child deserts', where three or more children claim a spot, an increase in demand due to new rights could lead to higher costs for the hours that parents still have to pay for.

In most regions of England, funding for three and four-year-olds is below the average hourly wage, prompting nurseries to offset this gap by raising fees for younger children.

In the year leading up to March 2025, nurseries in the most poorly funded regions of the UK have increased their fees significantly more than in better-funded areas.

London remains the most expensive region for childcare, followed by Southeast and Southwest England, while Northeast England remains the cheapest.

Professor Kerry Papps from the University of Bradford, one of the authors of the study, warned that if funding cannot keep up with increasing nursery prices, it could have unpredictable consequences.

She noted: "In child deserts, increased demand can raise prices for unpaid hours and negate savings for families who need it most."

Expansion of Free Childcare

The Department for Education is beginning to introduce new free childcare hours for working parents. From September, parents can receive up to 30 hours of free childcare for children aged nine months to four years.

This program is the final phase of a three-year expansion, with the first phase starting in April 2024, allowing working parents of two-year-olds to receive 15 hours of free childcare.

Who is Eligible for Free Childcare Hours?

You can receive up to 30 hours of free childcare per week if you meet the following criteria:

• Age of the Child: Your child must be between 9 months and 4 years old and live in England.
• From September 2025: All children aged 9 months to 2 years will be able to receive 30 free hours per week.
• Income: Each parent must earn at least £166 per week (equivalent to 16 hours at minimum wage) and not more than £100,000 per year.

If you do not meet the criteria for the 30-hour program, you can still receive 15 free hours per week for all three and four-year-olds starting from the term after their third birthday until they start school.

This is available for everyone, regardless of income or benefits.

Your two-year-old may also qualify for free childcare if you live in England and meet one of the following conditions:

• You receive support such as income support, working tax credit, or universal credit (if your annual income after tax does not exceed £15,400, excluding benefits).
• You receive the guaranteed part of pension credit.

Your child may also qualify if they:

• Are in the care of the local authority.
• Have an education, health, and care plan.
• Receive assistance due to disability.
• Have been adopted or fall under a special care order.

Using 15 free hours for two-year-olds does not affect your benefits.

As a second step, access to 15 free childcare hours for working parents of children aged nine months to three years was expanded in September 2024.

This expansion was announced by the previous conservative government during the spring speech of 2023. Previously, parents could only receive 15 free hours for three and four-year-olds in England.

The government has stated that parents taking the full 30 hours will save around £7,500 per year.

In summary, it is worth mentioning that the free childcare hours are only available for ‘working’ parents.

To meet these criteria, you must earn more than £9,518, but less than £100,000 per year.

If you are a couple, both must earn at least £9,518, and neither of you can earn more than £100,000 after tax.

This is total taxable income, including rental income, wages, and self-employment.

For more information, you can visit the Childcare Choices website.

How to Apply

Families in England can apply for free hours through the gov.uk website.

The process takes about 20 minutes, according to the government site.

You will need to create an account and provide personal information such as your national insurance number and your unique taxpayer reference if you are self-employed.

You will also need the registration number of your child’s birth certificate (if available) and the date you started or plan to start working.

If your application is approved, you will receive an 11-digit code confirming your entitlement to this service.

You must present this code to the childcare provider.

To continue receiving hours, you must confirm every three months that your information is correct.

For more information, please visit the gov.uk/free-childcare-if-working website.

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In summary, the new expansion of free childcare aims to reduce the financial burden on working parents. However, as the study shows, the rise in costs at nurseries could partially negate this benefit, especially in underfunded regions. This underscores the need for careful monitoring of the situation's development and an effective response from the government.