Childcare costs under scrutiny: how nurseries can prepare for potential CMA action
Childcare providers across England are facing increased regulatory attention as concerns grow around the real cost of nursery places. The Competition and Markets Authority (CMA) has been asked by the Education Secretary to examine additional fees charged on top of government-funded hours, including deposits, meal charges, nappies, and other everyday consumables.
While no formal investigation has been launched yet, the CMA has confirmed it is actively monitoring the sector and is expected to outline its next steps shortly. Based on recent activity in other industries, this could lead to a full market study or targeted enforcement around consumer protection and pricing transparency.
With an announcement anticipated in the near future, nursery operators should start preparing now.
Why nursery fees are facing greater scrutiny
The expansion of funded childcare hours to cover children from nine months old has intensified debate around affordability and transparency. Although many families are eligible for funded hours, parents frequently report paying significant additional costs that fall outside the government entitlement.
Common areas of concern include:
- upfront deposits;
- mandatory consumables (e.g. food, nappies, suncream);
- and 'top-up' fees linked to funded places.
At the same time, the sector is under commercial pressure. Media coverage has highlighted concerns about profitability, particularly in larger nursery groups backed by private investment. Combined with a growing mix of independent providers and corporate operators, this has created a landscape that is attracting regulatory attention.
For the CMA, these conditions mirror other consumer-facing sectors where concerns about pricing, transparency and competition have already triggered intervention.
What previous CMA investigations tell us
Recent CMA activity in professional services gives a strong indication of what could happen in the childcare sector.
- Private dentistry (March 2026): The CMA launched a market study focusing on hidden fees, transparency of pricing, and the effects of consolidation among larger providers.
- Veterinary services: A completed investigation resulted in new obligations, including clear online pricing, written cost estimates, and transparency around corporate ownership.
These sectors share several characteristics with early years provision:
- parents rely heavily on trusted providers;
- switching between providers can be difficult;
- pricing structures can be complex or unclear;
- and a mix of small independents and expanding corporate groups.
If similar action is taken in childcare, nurseries can expect increased expectations around:
- clear breakdowns of what funded hours do (and don’t) cover;
- transparent, accessible fee structures;
- easier comparison between providers;
- and disclosure of ownership structures.
How nursery operators can prepare
Although it may be tempting to wait for the CMA’s next move, enforcement action often focuses on existing practices rather than allowing time for adjustment. Early preparation can reduce legal and reputational risk.
Key steps to consider include:
1. Review parent-facing documents
Audit all contracts, terms and conditions, and fee schedules. Ensure deposits, consumables and additional charges are clearly explained and easy for parents to understand.
2. Assess internal pricing materials
The CMA may request internal documents as part of any investigation. Review board papers, pricing strategies, emails and notes related to fee-setting to ensure they reflect fair and compliant practices.
3. Strengthen staff training
Provide updated training for management teams and nursery leaders on:
- communicating fees transparently;
- avoiding inappropriate discussions with competitors;
- and ensuring consistency in messaging to parents.
4. Evaluate group structures and consistency
For multi-site operators and investors, additional focus should be given to:
- variations in pricing across locations;
- how corporate ownership is presented to families;
- and the potential regulatory impact of acquisitions or expansion plans.
How Knights can help
Preparing for potential CMA scrutiny doesn’t require significant upfront cost, but failing to act could be far more expensive if a formal investigation is launched.
With parental awareness already rising, providers who prioritise transparent pricing and clear communication will be better positioned to build trust and stand out in a competitive market.
Taking proactive steps now will help ensure your business is ready for any regulatory developments, while also strengthening compliance with existing consumer protection laws.
Knights supports childcare providers and other consumer-facing businesses on CMA-related matters, including:
- regulatory compliance;
- pricing transparency reviews;
- market studies and investigations;
- and merger control and expansion strategy.
Get in touch with our Competition team to discuss how we can support your organisation.