Introduction
This section describes average fees charged to parents by childcare providers and the average funding rates paid to childcare providers by the government.
Fees charged by providers to parents
The mean hourly parent-paid fee charged for children aged under 2 was £6.05 per hour and for children aged 2 it was £6.07 per hour.
Fees were slightly lower for pre-school children aged 3 and 4 (£5.90 per hour) and were lowest for school-age children (£5.68 per hour).
For the main groups of children by the survey (2-year-olds and 3- and 4-year-olds) private group-based providers charge parents the highest fees and childminders the lowest fees.
In 2023, private group-based providers were the most likely to have increased fees in the last 12 months. Eighty-seven per cent said that they had increased fees for children under 2, 80 per cent said that they had increased fees for children aged 2 and 79 per cent said that they had increased fees for children aged 3 and 4.
School-based providers were the least likely to increase fees for children aged 2 (36 per cent) and children aged 3 and 4 (29 per cent). Childminders were the least likely to increase fees for children aged under 2 (53 per cent).
In almost all cases, the proportion of providers that had increased fees in the previous 12 months was higher in 2023 than in 2022. The proportion of group-based providers increasing fees for children aged 2 and children aged 3 and 4, for instance, increased from 64 per cent to 76 per cent, and from 63 per cent to 74 per cent respectively.
Overall, average fees for children under 2 years of age increased by 6.5 per cent between 2022 and 2023, from £5.68 per hour to £6.05 per hour.
Childminders had the lowest fees and increased them by less than inflation (4.8 per cent). Fees charges by private group-based providers and voluntary group-based providers increased in line with inflation (by 7.5 per cent and 9.5 per cent respectively).
Hourly fees charged by school-based providers increased the most. They increased by 20.3 per cent in nursery class childcare settings and by 10.2 per cent in maintained nursery schools. However, not many school-based providers have children under the age of 2 enrolled with them, so these figures are based on small sample sizes (40 and 11 respondents to the survey respectively in 2023).
Overall, average fees for children aged 2 increased by 6.1 per cent between 2022 and 2023, from £5.72 per hour to £6.07 per hour.
Private group-based providers charged the highest fees (£6.98 per hour) and increased their fees in line with inflation (7.6 per cent). Fees charged by school-based providers in 2023 were in line with those charged in 2022. Childminders increased their fees by 5.3 per cent, below the rate of inflation.
Overall, average fees for pre-school children aged 3 and 4 increased by 5.5 per cent between 2022 and 2023, from £5.60 per hour to £5.90 per hour.
Same as for 2 year old children, private group-based providers charged the highest fees (£6.77 per hour) and increased their fees in line with inflation (7.6 per cent). The fees charged by school-based providers in 2023 were in line with those charged in 2022 and, although childminders increased their fees, this increase (5.3 per cent) was below the rate of inflation.
Mean hourly fees were highest in London, followed by the South East and East of England. They were lowest in Yorkshire and The Humber and the North East.
These figures mirror differences in average levels of disposable household income which in 2020 were highest in London (£29,890) and lowest in the North East (£17,416).
Differences in fees within regions were relatively small compared with differences between regions. Within regions, fees for children of different age groups varied by up to 50p per hour. Differences between regions, however, were much larger. The mean hourly fee for children under age two, for instance, was £5.15 in Yorkshire and The Humber, while in London it was £7.83, over 50% higher.
For children aged under two, mean hourly fees increased by between 3.8 per cent in the North West to 8.1 per cent in the South West.
For children aged two, mean hourly fees increased by between 4.8 per cent in the East Midlands to 8.1 per cent in the South West.
For pre-school children aged three and four, mean hourly fees increased by between 2.2 per cent in the East Midlands to 6.6 per cent in London.
The following tables and charts show mean and median fees in each local authority area.
In order to help interpret the mean, the tables show “95% confidence intervals”. Based on the responses we received to the survey, we can be 95% confident that the mean for all providers in the local authority lies between the “lower” and “upper” values.
For children aged two, half of local authorities had mean parent-paid fees of between £5.25 and £6.25 per hour.
However, none of the 50 local authorities in the North of England (North East, North West and Yorkshire and The Humber) had a mean parent-paid fee of more than £6.25 per hour, and none of the 32 local authorities in London had a mean parent-paid fee of less than £6.25 per hour.
Twenty-five local authorities (Surrey in the South East and 24 local authorities in London) had a mean parent-paid fee of £7.00 per hour or more.
For pre-school children aged three and four, average fees charged by providers were slightly lower.
There were similar regional disparities to fees for children aged two. None of the 73 local authorities in the North of England and East and West Midlands had a mean parent-paid fee of more than £6.25 per hour, and none of the 32 local authorities in London had a mean parent-paid fee of less than £6.25 per hour.
Twenty-three local authorities (Surrey in the South East and 22 local authorities in London) had a mean parent-paid fee of £7.00 per hour or more.
Funding rates paid by the government to providers
Free entitlement funding for 2 year old children is focused on disadvantaged children who attract higher rates of funding. In contrast, all working parents of 3 and 4 year old children are eligible for 15 hours of free childcare. As a result, mean funding rates are higher for 2 year old children than they are for children aged 3 and 4.
Mean funding rates for children aged 2 are highest for maintained nursery schools (£5.88) and lowest for childminders (£5.55).
In 2023, mean hourly funding rates increased by around 4 to 5 per cent, for all types of providers.
Maintained nursery schools have a higher proportion of children with special educational needs and disabilities than other types of providers. This is reflected in mean funding rates, which are nearly £1 per hour higher for children aged 3 and 4 in maintained nursery schools (£5.68 per hour) than they are for childminders (£4.74 per hour).
In 2023, mean hourly funding rates increased by between 1.3 per cent for nursery class childcare settings to 8.2 per cent for maintained nursery schools.
Although there are differences between regions in mean funding rates, these differences are smaller than they are for fees charged to parents.
Mean hourly funding rates for children aged 2 are highest in London (£6.47 per hour) and lowest in the North West (£5.31 per hour).
Mean hourly funding rates for children aged 3 and 4 are highest in London (£5.69 per hour) and lowest in the East Midlands (£4.49 per hour).
Differences between fees charged by providers to parents and funding rates paid by the government to providers
Three regions - the North East, Yorkshire and the Humber and East Midlands - have mean funding rates for children aged 2 that are slightly higher than the mean fees charged to parents. The difference between the mean fee charged to parents and mean funding rate is biggest in regions where mean fees are the highest (London, the South East and East of England).
Mean fees charged to parents of children aged 3 and 4 are higher than mean funding rates in all regions. Again, the difference between the mean fee charged to parents and mean funding rate is biggest in London, the South East and East of England.