Can Nurseries Legally Charge On Top Of Early Years Funding?

Have you become eligible for 15 or 30 hour childcare funding but found yourself still paying?

All 3-4 year olds in England can get 570 free hours of childcare per year, find out more here.

*Article updated March 2024*

The topic of Early Years Funding and extra payments is quite a hot topic over in our parenting community; it can be a shock to expect to be paying nothing towards childcare (other than food if your nursery charges and any extra hours on top of your funded hours), only to be charged a ‘premium’, or for the setting to only allow funded hours to be used a certain way leaving you with no choice but to pay extra to bridge the gap.

The big question is; are childcare settings allowed to do this? We’ve delved into the facts…

The Law

Childcare settings aren’t allowed to charge you extra for the hours your child is attending as a funded child, but they are allowed to dictate how they offer their funded places, which can leave parents confused. For example; if a child attended a setting for 30 hours a week, the setting wouldn’t be allowed to ask for an extra £1 for every hour attended. However, they would be allowed to charge for trips, food, etc as the EYF isn’t intended to cover this, and they can dictate where the hours are used to suit the business.

It surprises many parents to learn that the funding given to settings often doesn’t cover their usual fees and costs;

Statistics show that nearly half of parents have been asked to pay extra fees on top of their ‘free’ childcare. 4 in 10 nurseries worried that they’d need to close by the end of 2018 due to the government scheme funding not covering all their costs, so many nurseries have found ways to get around this.

Some private nurseries, preschools and childminders are setting ‘funded sessions’ for children using their EYF. This may be, for example, a funded 9-12 session in the morning, and then a 1-4 funded session in the afternoon, and the setting can charge whatever they need to cover the deficit between their usual prices and the funding they get from the government. So in this instance, a parent would be be paying for the hour gap between funded sessions unless they are able to collect their child for that hour and then take them back for the next session - obviously this isn't possible for most, especially working parents, so therefore there's no choice but to pay the additional fee for that gap in coverage.

It outrages some parents, but in all fairness, it must be difficult for childcare settings if the funding isn’t covering what they need! This is why it’s important to clarify all policies before securing a place at a setting.

Another tactic some settings have adopted is to set a policy that whilst you can use your funded hours term time only, you can’t choose to take your child out during holidays and must pay for their care during holidays too as per the contract. This means that the nursery is contractually guaranteed some income during the holidays, which is understandable but at the same time this isn’t ideal for parents who are able to book the school holidays off work and save money on childcare – if your only local nursery has this policy, it could be annoying!

It’s important to note that the Department of Education stipulates that settings should not be charging a deposit for children to have a funded place.

Some nurseries have also stated that they’ve had to raise their fees for 2 year olds and younger to bridge the financial gap caused by the Early Years Funding.

‘Champagne Nurseries, Lemonade Funding’

This campaign spearheaded by nurseries aims to highlight the importance of good investment in early years education. Baby Wellness and Childcare Expert Angela Spencer has been campaigning on this front for years, and has stated;

"I have become increasingly frustrated in recent years by how child development is regressing, how parents are not give the encouragement or tools to help their babies progress. We should be pushing the boundaries and giving the children the ability to develop. Instead, more and more news reports are stating how British children are underachieving."

This video explains the campaign well – you can read more about the campaign here.

Ultimately, once we’ve navigated the complexities of using Early Years Funding, it’s important to remember that our childcare workers work so hard to give our little ones a great start in life.

The Government Early Years Funding Scheme is marvellous, but it isn’t always the same story for childcare settings who are caught between the struggle of accepting funded places at a lower price than their standard charges, and not accepting funded places and potentially losing business!

The Early Years Funding is fantastic for parents and has allowed many of us to access childcare when we may have previously struggled to afford it, but it isn’t as ‘free’ as often lauded, and settings can take measures to recoup costs. Bear this in mind when applying for a place!

A 2023 childcare funding update:

During the 2023 Spring Budget, the Chancellor announced that the government would increase the availability of free childcare from approved providers for all parents. From September 2025, up to 30 free hours will be available for children over nine months and under five. This news was met with a very mixed response from the public; some parents in our community were elated as it would empower parents to be able to afford to go back to work sooner, improving the financial situations of their families.

On the other hand, many were concerned as it was also announced that to accomodate this, staff ratio requirements would be slightly reduced (this started in the September after the budget announcement) from one adult to four children, to one adult to five children in nursery settings. Some childcare providers are also concerned at the potential additional pressure this new influx of younger children may put on their settings and finances due to the previous issue we discussed; the subsidised childcare funding per child, per hour often does not meet the costs of the nursery, forcing them to put up costs elsewhere to compensate, often charging parents surprising fees just to be able to accomodate children using funded spaces as many of our community have experienced.

That said, this latest announcement by the government is a positive step forward for working families, especially those who had a flourishing career before parenthood that they want to continue to nurture whilst still raising a family. We can have both! Support is fundamental to this though, and we'll update this article in future if new debates and situations arise as a result of the childcare funding for children aged nine months and over.

Find out more here.

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