Free childcare pushing annual nursery costs beyond £6,300, report suggests

Free childcare has helped push up nursery costs for families to more than £6,300 a year, a report has suggested.

The study by the Family and Childcare Trust found that sending a child in Britain aged under two to nursery part-time, for 25 hours a week, now costs £122 - up 7 per cent on last year.

For a child aged two to attend for 25 hours, the cost is £119 a week, up 6 per cent.

It suggests that the price rises could be down to a new policy which offers parents 30 hours of free childcare for children aged three and four. 

"Where the prices providers are paid by local authorities are less than the prices they can change parents, they may put prices up elsewhere to compensate," the report said. 

To be eligible for the policy, which came into force last September, parents must be working at least 16 hours a week at the national minimum wage, and neither can be earning more than £100,000. 

The Trust said most local authorities were "unsure" about the effect the policy had had on prices, but added that "where they have seen an impact it has tended to be towards a rise, particularly for three and four year olds outside the entitlement". 

Neil Leitch, chief executive of the Pre-school Learning Alliance, which represents childcare providers, said: "Childcare funding has failed to match the cost of delivering places, forcing many early years providers to increase parent fees to plug this funding shortfall.

"The introduction of the 30 hours has only served to exacerbate this problem and so it's absolutely no surprise that parents – and especially those with younger children, many of whom aren't eligible for 'free entitlement' schemes – are seeing significant childcare cost increases." 

Nadhim Zahawi, minister for children and families, said: “The most pleasing finding in the Family Childcare Trust’s report is that parents are now spending less of their wages on that childcare as a result of the steps this government has taken.

“There are always challenges when implementing any new policy but we are investing record amounts in childcare – around £6billion a year by 2020 – and are working with the sector, which has responded well to the 30 hour roll out to address them."