Coram report: cost of childcare increasing in Wales and Scotland but halved in England
Coram’s annual childcare report 2025 shows just how much the funded entitlement can support parents with the average childcare bill halving for parents in England.
https://www.familyandchildcaretrust.org/childcare-survey-2025
However, those who are not eligible have seen their bills rising by £100 a week or more.
In Scotland and Wales where expansion of places for two year olds is only beginning to progress, parents continue to pay more for their childcare – 7% more in Scotland and 10% more in Wales.
Rising staffing costs, particularly National Insurance Contributions and statutory minimum wages (Real Living Wages in Scotland) are pushing up costs even further for providers although they are trying to keep parental fee increases to a minimum.
In England from April the new Government guidance emphasises the voluntary nature of the charges to parents, with many providers struggling to remain sustainable. If parents don’t pay additional charges for things which aren’t covered by Government funding this will strain finances further. From September, the Government will be buying around 80% of all childcare places.
For children with additional needs, there are still not enough places with fewer than a third of local authorities across the UK saying they have enough places for 75% of these children. More than half of councils were not able to say.
England:
- Parents paid less than half of what they did the previous year for a part-time place for their child and 20% less for a full-time place
- Families who are not eligible paid £105 more for a part-time place for a child under two
- Parents who need to pay for 35 extra hours to take this up to a full-time place will pay an average of £238.95 per week for children under two and £225.70 per week for two-year-olds
- For parents of three- and four-year-olds using a full-time place the average weekly price in a nursery is £126.94 in England, a 4.7% increase since last year
Purnima Tanuku, Chief Executive of National Day Nurseries Association (NDNA) said: “It’s no surprise that over the last year, the cost of childcare to parents has reduced, largely due to the significant expansion in government-funded childcare places to eligible children from nine months old upwards. This is great news for parents but the cost of delivering places has not reduced, it is just being subsidised by providers.
“Our recent survey showed that 92% of nurseries are making a loss on places for three and four-year-olds. The situation will get worse from April 2025 as National Insurance Contribution rises and statutory minimum wage rises will push up nursery staffing bills by around 15%. The average nursery will have to increase fees by around 10% to remain sustainable.
“With the new guidance on charging parents making it clear that these charges are voluntary, some nurseries – all of whom rely on these charges to provide nutritious meals to children and give children the best start in life – are likely to reduce the number of funded places they offer. Some expect to close their doors for good. So there’s a real risk that there won’t be sufficient places for all those who need them.
“Year after year Coram’s reports show a dwindling of places to support children with SEND. These are the very children who will benefit the most from early education and care places. There must be more investment in resources locally so nurseries are able to meet all children’s needs.”
Scotland:
- Parents saw increases of nearly 7% in the cost of part-time nursery places for under-twos and two-year-olds, compared to 2024.
- The average full-time place in a nursery for a three- and four-year-old costs £105.88 per week, if they are receiving 30 hours of funded childcare and paying for 20 hours, a 3.7% increase on last year.
- Availability of the universal 1,140 hour entitlement for three- and four-year-olds, and the targeted 1,140 hour entitlement for two-year-olds, are both relatively high with 78% of LAs reporting enough places for at least three quarters of children.
Purnima added: “Childcare costs have risen in Scotland because funding rates have not kept pace with delivery costs, in particular staffing costs. Only three local authorities gave providers a 10% uplift to enable them to pay the Real Living Wage last year. This leaves nurseries with a shortfall which can only be passed onto parents in the form of higher fees.
“This situation is set to worsen once the National Insurance Contributions increase from April. This will add £2,200 per employee and around £42,000 per average nursery. These costs must be reflected in the rates that local authorities pay to providers otherwise parents will continue to have to shoulder the shortfall. All of the financial pressures facing settings at present, including local authority budget cutting decisions, may lead to many more nursery closures.”
Wales:
- Parents were paying nearly 10% more in the cost of parttime nursery childcare for under-twos since last year, and just over 7% for two-year olds.
- The average full-time place in a nursery for a three- and four-year-old costs £119.23 a week, a 5.6% increase on 2024.
- 67% of local authorities have sufficient places for at least three quarters of children entitled to Flying Start, and 61% said the same for the working parent entitlement for three- to four-year-olds.
Purnima commented: “The single biggest reason that the cost of childcare has risen in Wales has been the funding rates for the Childcare Offer which hadn’t increased since 2022, despite all nursery delivery costs rising significantly. This has led to fee increases for parents because nurseries have been making a loss on each funded place.
“The Welsh Government has taken steps to address this from next year with an increase in funding to £6.40 per hour and permanent relief from paying business rates. Providers are able to charge parents up to £10.80 for meals and snacks.
“While this is a helpful start, providers are still facing rapidly rising costs from April. Our recent poll with member nurseries across Wales showed that the average nursery is having to increase fees to parents by 12% which is still lower than the average staffing bill increase of 15%.
“As the two-year-old Flying Start offer expands, it’s important that local authorities continue to work with existing childcare providers to ensure there are sufficient places available.”
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