An open letter to parents about “Free” Early Childhood Education and Care (ECEC)

Dear parents,

We are writing to explain what is happening behind the scenes in Early Childhood Education and Care (ECEC) right now, and why many nurseries are deeply worried about the future of ECEC places and whether early years education and childcare  will still exist where and when families need it.

The question at the heart of the issue
A simple question now sits at the centre of the system:

Can the government forbid nurseries from charging parents, while also not paying enough to cover the real cost of ECEC ?

And if it does, who carries the risk when nurseries can no longer survive?
What has changed recently?
A legal case involving Tops Day Nurseries is now going to appeal. It follows a 2025 decision by the Local Government and Social Care Ombudsman, which found that a local council was wrong to allow a nursery any flexibility in charging parents for government- funded childcare hours.

After that decision, the Department for Education tightened enforcement across England. Councils and nurseries were told that “free means free”, with no tolerance for flexibility, even where nurseries say they cannot cover their costs. This is why you have seen recent changes to invoices, reduced flexibility, and ever-more-complex ways in which nurseries are trying to remain afloat. You may also attend a childminder who has decided to stop accepting three-year-olds due to the drop in funding rate at age three. Or you may have suddenly seen your three-year-olds’ fees increase to try and make up for the drop in funding.

So, as you are probably aware, this change is already affecting early years education and childcare and families on the ground.

For many years, parents and nurseries alike have quietly accepted an uncomfortable truth:

Government funding does not cover the real cost of ECEC. To keep doors open, many nurseries have relied on cross-subsidy. Paid hours help support funded hours. Optional extras help cover unavoidable costs like staff, buildings, food, and energy.

This was never ideal, but it kept ECEC available.

Now that flexibility is being removed, the gap is fully exposed.

The government is not providing “30 free hours” of childcare: it is paying nurseries below the cost of delivery to provide those hours.

Every nursery in a local authority receives the same hourly rate, regardless of whether it operates from a village hall or a purpose-built setting, whether staff are graduates or trainees, or whether costs are high or low. Rates also vary sharply between areas with Westminster receiving double other areas for children under two….. make of that what you will.

Internationally, the UK spends far less on early years than comparable countries. While Nordic countries invest around 1.7% of GDP in early childhood education and care, the UK spends around 0.5%. In simple terms, countries like Sweden spend roughly £11,000– £13,000 per child per year, while UK funding is often £5,000–£8,000.

What is happening as a result?

Rather than address this funding gap, responsibility has been eschewed by the DfE and Treasury and pushed downwards. Local authorities are being told to enforce the rules more strictly. This puts them in a precarious position as it risks their adequate provision requirements, but means settings close their doors or refuse to offer funded places. Nurseries are facing greater legal risk. Central government has stepped back from responsibility for whether the system can actually function.

The consequences are already visible:

• Nurseries withdrawing funded places

• Nurseries selling to large chains or closing

• A sharp fall in childminder numbers

• Longer waiting lists

• Fewer options for parents

In the last year alone, thousands of childcare providers and childminders have left the sector. This is not because families do not need ECEC. It is because providing it has become too risky.

Why this matters to you

If strict enforcement continues unchanged, nurseries are left with only two options: operate at a loss, or stop offering funded childcare places altogether. Currently, 78% of settings would prefer to opt out of the funding, only 20% wouldn’t consider opting out PURELY for the sake of the children and families that come to them. They will likely not be able to continue operating. Only 1% feel that the funding is adequate for their needs. 3% have opted out.

If 78% of settings opt out, this would mean:

• fewer childcare places at the nursery of choice,

• longer waiting lists,

• parents forced to reduce work or leave jobs,

• “free childcare” that exists on paper but not in real life.

An entitlement that cannot be delivered in practice is not a real entitlement.

What parents deserve
Parents deserve honesty.

• You deserve to know when childcare places are at risk, before they disappear.

• You deserve a system that prioritises availability, not just rules.

• You deserve childcare that exists, not childcare that is only promised.

This is not about choosing between “free” and “paid”.
It is about whether there is childcare at all.

A final thought
You cannot design a system that only works if everyone quietly bends the rules, and then punish people for doing so.

And you cannot enforce “free childcare” in a way that removes ECEC from communities.

We are sharing this now because parents should not be the last to find out when ECEC disappears.

With honesty and respect
Your Early Years Provider