The cost of childcare in the UK is among the highest globally, with nursery fees consuming a significant portion of household income. A recent survey by the National Day Nurseries Association (NDNA) indicates that fees are expected to rise by 10%, driven by increasing operational costs and tax changes affecting childcare providers.
For many parents, childcare is already their largest expense after housing. With fees projected to climb further, affordability concerns are growing, particularly as government subsidies fail to cover rising costs. According to OECD data, childcare in the UK already represents 19% of the average household income, placing the country among the top five most expensive for childcare worldwide.
Nurseries Under Financial Pressure as Costs Outpace Funding
The UK’s childcare sector is facing increasing financial strain, with many nurseries struggling to remain viable. The NDNA’s survey of 728 nurseries found that 96% plan to raise fees to cover rising costs, with staffing expenses expected to grow by 15% from April. Despite this, government funding rates for providers will rise by just 4%, failing to bridge the gap between costs and subsidies.
As a result, many nurseries are operating at a loss. The NDNA estimates that providers will lose £2.25 per hour for three- and four-year-olds and £1.64 per hour for two-year-olds. Purnima Tanuku, NDNA’s chief executive, warned that government support remains inadequate, stating:
“If the sector’s most significant customer is not paying their fair share, nurseries have to find this money from somewhere else or close their doors.”
The rising costs coincide with the government’s childcare expansion plan, set to provide 30 hours of free childcare for all children under five from September 2024. While this aims to ease financial burdens on parents, the funding shortfall raises concerns about whether providers can sustain the scheme without further price increases or closures.
UK Parents Face Soaring Fees, Outpacing Many European Countries
For UK parents, the rising cost of nursery fees adds to an already heavy financial burden. According to MoneyHelper estimates, childcare costs range from £125.91 per week for part-time care to £285.31 per week for full-time nursery care, translating to annual costs of £6,500 to over £14,000 per child. With an average disposable household income of £34,500, childcare can consume up to 43% of family earnings, even after tax-free childcare benefits.
Compared to other European nations, UK childcare remains significantly more expensive. France (7%), Poland (8%), and the Netherlands (11%) all have much lower childcare costs as a proportion of income, according to OECD data. The UK ranks as the fourth most expensive country for childcare, behind New Zealand (37%), the United States (32%), and Switzerland (20%).
With rising nursery fees, many parents may struggle to find affordable childcare, despite government-backed schemes. Industry leaders and opposition politicians have called for tax relief for nurseries and increased government funding to prevent further price hikes. However, without substantial intervention, parents will likely continue to bear the rising costs of early years care.
