The CMA Is Investigating Nursery Fees: What Every Provider Should Review Now
The Competition and Markets Authority is examining whether England’s childcare market works well for families, providers and the wider economy. Fees, funded hours, additional charges and the information parents receive are all part of that picture.
Your fee structure is no longer just an internal pricing decision
For years, nursery owners have had to balance rising staffing and property costs against funded rates that do not always reflect the real cost of delivery. Many settings use private fees, additional hours and optional extras to keep their provision sustainable.
That commercial reality has not disappeared. What has changed is the level of attention being paid to how fees are structured, explained and experienced by parents.
The CMA published an update to its childcare market study on 25 September 2026. The study is broader than a simple review of nursery add-ons. It covers funding, provider sustainability, access, local authorities, ownership models and whether families have the information they need to make informed choices.
The position today
Latest CMA update
The regulator published an update on its evidence gathering and developing thinking.
Primary scope
The study focuses on England, although its findings may be relevant elsewhere in the UK.
Final report due
The official timetable currently points to publication of the final report in May 2027.
Checks to make now
A short internal audit can reduce complaints, confusion and avoidable commercial risk.
What is the CMA actually examining?
The official scope shows why nursery owners should resist the idea that this is only an investigation into “hidden fees”. The CMA is looking at how the whole childcare market functions.
Access and expansion
The availability of suitable childcare places, how well provision meets different needs and the barriers businesses face when opening or expanding.
Affordability and funding
How prices, household affordability and provider sustainability are affected by underlying costs and government funding.
Information and choice
Whether parents can understand and compare childcare options, including the effect of market practices on the choices they make.
Public bodies and local authorities
The role of local authorities, mayoral combined authorities, regulation and other public levers that shape the market.
Provider types and ownership
How different provider models and ownership structures affect costs, capacity and parent choice. That makes the study relevant to independents, growing groups, schools and childminders, not only large chains.
Can nurseries still charge for meals, nappies and extras?
Yes, in the right circumstances. The current DfE statutory guidance for England allows charges for additional private hours and certain optional extras. The crucial issues are what the charge covers, how it is presented and whether families can access their funded entitlement without being forced to pay it.
Charges that can be permitted
- Additional private hours beyond the funded entitlement
- Meals and snacks consumed by the child
- Consumables such as nappies or sun cream
- Optional activities that are not necessary to deliver the EYFS
- Extra services that parents knowingly choose to buy
Charges that create a clear risk
- A top-up fee for the difference between funding and your normal rate
- A general or unitemised “sustainability” or “enhancement” charge
- Business running costs added on top of funded hours
- Materials needed for the effective delivery of childcare or the EYFS
- SEND support costs made a condition of accessing a funded place
- A non-refundable registration, deposit or retainer fee imposed as a condition of an entitlement place
The detail of your obligations also sits in the provider agreement you have with your local authority. Review the current local agreement alongside the national guidance before changing your fee policy.
When is an “optional” charge not really optional?
This is where many providers create unnecessary risk. The issue is not simply whether a policy uses the word optional. It is whether the family has a realistic route to decline the charge and still receive the funded provision.
The compulsory consumables package
A fixed daily charge covers nappies, wipes and sun cream, but parents are told they cannot provide their own. That is difficult to reconcile with the requirement for reasonable alternatives.
The funded place tied to paid hours
A parent can access funded hours only if they purchase a full day, extra session or minimum number of private hours. Private hours can be charged for, but they should not become a compulsory gateway to a free place.
The vague enhancement fee
The invoice contains one general charge for “quality”, “enrichment” or “business sustainability” without identifying a specific optional service. The current guidance explicitly warns against general and non-itemised charges.
The paper opt-out that nobody can use
The policy technically permits an opt-out, but parents are discouraged, made to feel their child will miss ordinary provision or are not told how the alternative works. That gap between policy and practice is exactly what an internal audit should uncover.
Funded-hours restrictions that deserve a second look
A delivery pattern is not automatically unlawful because it does not suit every family. Providers need workable session structures, sufficient staffing and a commercially viable model. The risk increases when restrictions are unclear, inconsistent or effectively force parents to buy something else.
Daily limits
Are funded hours capped per day? Is that limit published before a parent joins?
Fixed time bands
Can hours be used only at certain times? Is the reason and pattern easy to understand?
Full-day sessions
Does a full-day requirement lead automatically to paid hours around the funded portion?
Minimum attendance
Must a child attend more hours than their entitlement? Check whether that becomes a purchase condition.
Term-time or stretched
Do parents clearly understand how 38-week hours change when spread across more weeks?
Availability by day
Are funded places restricted to particular days and is that information published accurately?
What parents told the Department for Education
On 24 September 2026, the DfE published a detailed report on parents’ experience of the earlier 15-hour rollout. Its findings help explain why fees, restrictions and information have become such prominent issues.
Four figures providers should notice
reported paying additional charges across the two survey waves.
reported restrictions on how they could use their funded hours.
of claimants had been placed on a waiting list before accessing a place.
initially considered their monthly childcare costs affordable.
The report also found that meals, drinks and snacks were the most common fixed charges. Some parents said they were unsure what certain charges covered. That is a direct warning for any nursery using a broad label rather than a clear itemised description.
What to review in your contracts, fee sheets and invoices
Do not review the fee policy in isolation. A parent may see different wording on your website, registration form, contract, welcome email and monthly invoice. Those documents should tell the same story.
Headline prices
Show private rates, funded patterns and additional charges without making parents assemble the real price themselves.
Itemised invoices
Separate funded hours, private hours and every chargeable extra. Avoid vague catch-all labels.
Opt-outs
State how a parent declines an extra and what reasonable alternative the setting offers.
Deposits
Clarify whether money is refundable, when it may be retained and how the rule applies to entitlement places.
Notice and fee increases
Use a clear notice period and a transparent mechanism. Avoid giving yourself an unlimited right to change terms.
Closures and absences
Explain charges for holidays, sickness, bank holidays, emergency closures and settling-in sessions.
Late collection
State the amount, trigger and reason for late fees in plain English.
Complaints
Give parents a route to question an invoice before disagreement becomes a public dispute.
Website consistency
Make sure the online information matches what the manager says during a tour and what accounts later invoices.
The 10-point nursery fee audit
This is the practical work I would prioritise now. You do not need to wait for the CMA’s final report to improve weak wording or inconsistent practice.
Publish the real prices
Check that fees, chargeable extras and funded-hour patterns are easy to find, current and specific to the setting.
Map every income line
Identify what each parent charge pays for and whether it is a private hour, optional extra, deposit or other fee.
Remove vague labels
Challenge phrases such as “general extras”, “quality fee” and “sustainability contribution”.
Test every opt-out
Write down exactly what happens if a parent declines meals, consumables or an optional activity.
Check the funded pattern
Confirm daily limits, session times, stretched hours and availability against your local authority agreement.
Itemise the invoice
Make funded hours, private hours and specific extras visibly separate and understandable.
Review deposits
Check refund terms, entitlement-place conditions and the wording used during registration.
Align every document
Compare your website, prospectus, contract, fee sheet, parent handbook and staff scripts.
Train the team
Managers and administrators should give the same answer when a parent asks what is funded and what is optional.
Keep the commercial evidence
Retain clear cost, occupancy and staffing data so pricing decisions can be explained and reviewed responsibly.
What could happen next?
The CMA has not reached its conclusions. Its own announcement says possible outcomes depend on the evidence and could include recommendations to government, improvements to information for families and providers, or guidance for businesses and consumers.
The CMA published its latest market study update and responses to the original scope.
The regulator continues examining the market, including experiences of families, providers and public bodies.
The current official timetable says the final report is due to be published.
Build transparency into the financial model from day one
A weak fee structure is much harder to repair after parents have signed contracts and the nursery depends on every income line.
- Separate funded income, private-hour income and optional extras in the forecast.
- Do not assume every parent will buy every extra.
- Model what happens if uptake of optional services is lower than expected.
- Stress-test wage increases, occupancy changes and different age mixes.
- Make sure the admissions process explains the likely total cost before a deposit is paid.
- Build an invoice layout and parent fee guide before opening, not after the first complaint.
CMA nursery fee investigation FAQs
Is the CMA accusing all nurseries of overcharging?
No. This is a market study examining how the wider childcare system works for families, providers and the economy. The scope includes funding, sustainability, access, public bodies, ownership and consumer information. It is not a finding that every provider has acted wrongly.
Can a nursery charge for meals and nappies?
The DfE guidance permits charges for meals, snacks and consumables such as nappies or sun cream, but they must not become a mandatory condition of accessing a funded place. Providers should publish the costs and offer reasonable alternatives for parents who do not wish to pay.
Can funded hours be offered only in set sessions?
Providers need workable delivery patterns and can publish when funded places are available, subject to the rules and their local authority agreement. The concern is where restrictions are unclear or make purchasing additional hours or extras a condition of accessing the entitlement.
Do nurseries have to itemise invoices?
The DfE statutory guidance tells local authorities to ensure parents receive clear, transparent and itemised information. Funded hours, private hours and chargeable extras should be separately identifiable. Check the precise invoicing requirements in your current local authority provider agreement.
When will the CMA publish its final childcare report?
The official CMA case timetable currently lists May 2027 for the final report, with a statutory deadline of 30 June 2027.
Does the investigation cover Scotland, Wales and Northern Ireland?
The market study focuses on England because early years policy is devolved. The CMA has said it will consider how findings may be relevant to other parts of the UK, but providers outside England must follow their own national funding and regulatory arrangements.
Is your nursery fee model sustainable and clear enough to defend?
If you are opening a nursery, revising your funded-hours model or trying to make an existing setting more sustainable, I can help you examine the numbers, the parent journey and the practical risks before they become expensive problems.
Official sources
- CMA: Early years education and childcare market study, opened 1 July 2026 and updated 25 September 2026.
- CMA: Childcare market study launch and scope, published 1 July 2026.
- DfE: Early education and childcare statutory guidance, valid from 1 April 2026.
- DfE: Childcare Experiences Survey report, published 24 September 2026.
- CMA: Guidance on writing fair consumer contracts.
Note: This article is general business information for early years providers and does not constitute legal advice. Requirements may also be set through your local authority provider agreement. Take specialist advice on your own contract, funding arrangement or dispute.
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