Competition Watchdog Launches Major Investigation Into England’s Childcare Sector

The Competition and Markets Authority has launched a major market study into England’s early years education and childcare sector, including nurseries, childminders and school-based early years provision.

The review will look at whether the childcare market is working well for families, providers and the wider economy. It will examine the availability of childcare places, affordability for parents, provider costs, government funding and the information families use when choosing childcare.

This is a significant development for the early years sector because it goes beyond one issue or one provider. It looks at the wider childcare system and asks whether the market itself is working as it should.

What is the CMA investigating?

The Competition and Markets Authority, often known as the CMA, has launched a market study into early years education and childcare services in England.

The study focuses on childcare for children from birth until they start school, usually aged four or five. According to the CMA, this includes nurseries, childminders and school-based early years settings. It does not include nannies or informal childcare where funded hours cannot be used.

The CMA says it wants to understand whether the sector is working well for families, providers and the wider economy.

Why is this happening now?

Childcare has become one of the biggest pressure points for families and providers. Parents often say childcare is expensive, difficult to find and confusing to understand. At the same time, many nurseries and childminders say they are facing rising staffing costs, higher overheads, funding pressures and challenges staying financially sustainable.

The government has expanded funded childcare entitlements, including support for younger children of working parents. But this has also led to bigger questions about whether government funding properly covers the true cost of delivering places.

The CMA review gives the sector an opportunity to put those issues on record in a formal national investigation.

What areas will the review cover?

The CMA has said the market study will look at several key areas across the sector. These include availability, affordability, costs, funding and how parents make choices about childcare.

Why nursery owners should pay attention

This review could become one of the most important childcare investigations in years. It is looking at the issues that many providers talk about every day: funding rates, staff costs, fees, funded hours, demand, occupancy and sustainability.

If the CMA finds that parts of the market are not working well, it could make recommendations to government, regulators or the sector. That does not mean instant change, but it could influence future childcare policy.

For nursery owners, this is also a chance to explain what it actually costs to deliver childcare. Many public conversations focus on what parents pay, which is understandable. But the other side is what providers spend to deliver safe, high-quality early years provision.

The issue of “free” childcare

One of the biggest frustrations in the sector is the language around “free childcare”. Parents often expect funded hours to mean they will pay nothing. Providers often argue that the funding rate does not always cover the true cost of delivery.

This can create tension between parents and nurseries. Parents may feel they are being charged unexpected extras. Nurseries may feel they have no choice but to charge for meals, consumables, longer sessions or additional services to make the funded offer financially viable.

The CMA review could help bring more clarity to this issue by looking at affordability, pricing and how information is presented to families.

Why childminders are included

The review is not only about nurseries. Childminders are also part of the study.

This matters because childminder numbers have been under pressure for years, and many families rely on childminders for flexible, home-based childcare. If childminders are leaving the sector because of low income, administration, funding issues or rising costs, that affects parental choice and childcare availability.

A healthy childcare market needs a mixture of provision, including nurseries, childminders and school-based settings.

What could this mean for parents?

For parents, the CMA review could lead to clearer information about childcare costs, funded hours, additional charges and what families should expect when choosing a setting.

It may also highlight areas where parents struggle to find places, such as baby rooms, SEND provision, wraparound needs or flexible childcare for shift workers.

If the review leads to stronger guidance around transparency, parents may get clearer fee information before they commit to a provider.

What could this mean for providers?

For providers, the review could be an opportunity and a risk.

The opportunity is that the CMA may recognise the real pressures nurseries and childminders face, including staffing costs, funding rates, rent, energy costs and regulatory requirements.

The risk is that some providers may face more scrutiny around deposits, additional charges, fee transparency, contract terms and how funded hours are explained to parents.

Good providers should not panic. But they should make sure their fees, funded hours policy, extra charges and terms are clear, fair and easy for parents to understand.

How can providers and parents have their say?

The CMA has invited views from interested parties on the proposed scope of the market study. Written representations should be sent to the CMA by email by 26 July 2026.

This is important because the review will be stronger if it hears from people who actually use and deliver childcare. Nursery owners, childminders, parents, local authorities and sector organisations all have useful experiences to share.

Providers may want to explain the cost pressures they face, the challenges around funded hours, the barriers to expansion, and how funding arrangements affect their ability to offer places.

My view

This review is welcome because childcare is often discussed in a way that separates parents and providers, when the truth is both sides are under pressure.

Parents need childcare that is affordable, available and easy to understand. Providers need funding and fees that allow them to deliver safe, high-quality care while paying staff properly and staying financially viable.

If the CMA review helps bring more honesty to the discussion, especially around the true cost of childcare and the limits of funded hours, it could be a positive step.

Final thoughts

The CMA’s investigation into England’s childcare sector is one to watch closely. It could shape future conversations about nursery fees, funded hours, provider sustainability and childcare availability.

For nursery owners and childminders, this is a chance to make sure the realities of running a childcare business are heard. For parents, it could lead to clearer information and a better understanding of what childcare really costs.

The key question now is whether the review will lead to meaningful changes, or simply confirm what many people in the sector already know: the childcare market is under serious pressure and needs a funding system that works better for everyone.