According to data from the children's charity Coram, annual childcare costs for children under two in England have fallen for the first time in 15 years. This phenomenon comes as the government continues to push forward its subsidized childcare plan, which will provide 30 hours a week of childcare for all eligible preschool children (not just current three- and four-year-olds) of working parents, starting in September.
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03-20, 2025However, some nurseries and childminders say they may have to withdraw from the scheme because government funding struggles to meet rising costs, including the increase in National Insurance from April. Education Secretary Bridget Phillipson said the survey highlighted the "real-world changes that expanding childcare entitlements are bringing." In England, the government has been pursuing a plan to help working parents cope with high annual childcare costs, which peaked at nearly £15,000 last year.
Coram's annual Family and Childcare Survey shows the impact of these changes, with annual fees down 22% for eligible working parents. But in other areas, prices have risen for childminders, nurseries, pre-schools and after-school care. Wales is now the most expensive place in the UK for childcare, with full-time care for children under two costing £15,038. Costs have also risen for three- and four-year-olds in England, Wales and Scotland.
Coram Family and Childcare's head, Lydia Hodges, said that while funded hours in England are a "welcome step" in making childcare affordable for working parents, the system now needs rebalancing. She said parents who are not eligible for subsidized childcare are "unlikely to be able to afford to give their children the same amount of early education as those who get it for free." The report also found that the availability of nurseries and childminding places varies by local council area, with the lowest availability for children with special educational needs and disabilities and for families living in rural areas.
Meg Patten, who is eight months pregnant and expecting her second child, faces a 40-minute drive to the nearest nursery with availability in April 2026. For Meg Patten, the subsidized hours offer tremendous help, reducing her childcare costs. However, securing a place for her second child has become difficult due to increased demand. She said she has tried all the local establishments, including the nursery her three-year-old son Rupert attends, but they are fully booked until September 2026. The nearest nursery with availability next April is a 40-minute drive from her home, in the opposite direction to her commute. "I told them when I was eight weeks pregnant, which is really early," she said. "It's really stressful - when I go back to work, I need to drop two children off in opposite directions."
Her son Rupert is eligible for 30 hours a week of government funding, but his nursery only has availability for two days. This means Meg's parents (who also live in north Birmingham) are helping with childcare until he starts school. Joeli Brearley from the charity Pregnant Then Screwed said the fall in costs for under-twos is "a milestone to celebrate" but "the looming crisis in supply could leave families in the lurch."
The waiting list at Stanford's Children's Garden Day Nursery is already full until September 2026. Working parents who already have places are now requesting to increase their hours from this September, when the government will double the hours their children are eligible for. Nursery owner Claire Kenyon said she is considering limiting the number of funded hours people can use, or withdrawing from the scheme altogether, as she cannot balance the books. This would mean fewer government-funded nursery places. The government estimates that an additional 70,000 places will be needed by this September due to increased demand.
Ms. Kenyon said that on the one hand, the government is telling parents they can expect cheaper bills, but she believes they are not paying nurseries enough to provide those services. Last month, the Department for Education (DfE) sent a letter to nurseries saying parents should be able to opt out of paying chargeable extras, including lunch, "to ensure no family is priced out." However, Ms. Kenyon said some nurseries have been using these payments to subsidize funding for three- and four-year-olds, and now more than 5,000 nurseries have signed an open letter to the DfE calling for a delay to the new rules. "The government has decided to put more stringent regulations on us, and I think some nurseries are just saying, 'we can't do it - if we want to keep our business and our staff, we have to pull out.'"
Changes to National Insurance have also added further financial pressure. Ms. Kenyon said she will be paying an extra £200,000 a year in staff costs from April. The National Day Nurseries Association said nurseries must raise fees by around 10% to remain sustainable. Last December, the government announced it would increase early years funding by £2 billion this year to support the expansion. Neil Leitch of the Early Years Alliance said their research shows many providers are choosing to limit their funded places, or withdraw from the schemes altogether, due to "unsustainable financial pressures." Of the 1,100 nurseries surveyed by the charity, around 185 said they were "likely" to withdraw from the scheme completely in the next 12 months. The government estimates that an additional 70,000 childcare places and 35,000 staff will be needed by September due to rising demand.
The type of support available to families varies across the UK. The Scottish government said all three- and four-year-olds, and eligible two-year-olds, can access 30 hours a week of term-time funded childcare, regardless of their parents' working status. The Welsh government said its focus is on "the most disadvantaged communities" and is expanding childcare support for two-year-olds across Wales. Phillipson said providing a better early years system "is a top priority." And working families will get "more" "from September, as government funding increases from 15 to 30 hours a week."
