Free childcare expansion could push up nursery fees – study warns

A University of Bradford and University of Bath study tracking prices over the past 18 months found nursery fees have risen fastest in areas with the lowest government funding. In 'childcare deserts' - where three or more children compete for every available place - the surge in demand from expanded entitlements risks driving up prices for the hours parents still pay for.

Three and four-year-olds hardest hit as funding gap widens, with steepest price hikes in worst-funded areas.

Key findings:

• Funding gap for older children: In most of England, funding for three and four-year-olds is lower than the average hourly fee, forcing nurseries to plug the gap by charging more for younger age groups.
• Bigger price hikes in poorly funded areas: Between March 2024 and March 2025, nurseries in the worst-funded half of the country raised fees significantly more than those in better-funded areas.
• Sharp regional divides: London remains the most expensive region for childcare, followed by the South East and South West; the North East is cheapest.
• Sector-wide squeeze: Analysis of one of the UK's largest nursery chains, with around 300 sites, shows its prices broadly match competitors, suggesting a national rather than isolated issue.

'Childcare deserts'

Professor Kerry Papps, study co-author and Professor of Economics at the University of Bradford, said: "Unless funding keeps pace with nursery costs, the policy could backfire. In childcare deserts, the extra demand may push up prices for unfunded hours, wiping out savings for families who need them most."

Dr Joanna Clifton-Sprigg, University of Bath and study lead researcher, said: "Free childcare is a bold and welcome move but without funding that reflects real costs, it risks falling short.

"Where funding is lower, we're seeing faster price rises for the hours parents pay for, a pattern that could deepen regional inequalities."

The study used monthly price data from March 2024 to March 2025 from a large UK nursery chain, comparing it with the Department for Education's 2024 Childcare and Early Years Provider Survey and prices from nearby nurseries.

The team will continue to track the impact as the final phase of the policy is rolled out in September 2025.

This research has been funded by the Nuffield Foundation and Research England Policy Support Fund.

This research from the University of Bradford shows how national childcare policy is affecting real families, especially in places where support is already stretched. It's a great example of how the University uses its expertise to tackle everyday challenges and help shape better decisions for society. By highlighting the risks of rising nursery fees in underfunded areas, the study speaks directly to Bradford's mission to make a difference locally and nationally through meaningful research.

It also fits with the University's goal to widen access and reduce inequality. The findings show how some families could end up worse off, even with policies meant to help them. This work helps Bradford stay true to its values, trust, inclusion, innovation and excellence, while making sure research leads to real change.