Government guidance which aims to prevent childcare providers from what it describes as “overcharging” could “seriously threaten sustainability” in the sector, according to the National Day Nurseries Association.

The new guidance aims to support local authorities to ensure providers make all additional charges clear and upfront to parents, and makes it clear that these charges must not be included as a condition for parents accessing their hours.  

Local authorities are called on to ensure providers’ invoices to parents are clearly itemised by January 2026. The guidance says invoices should be broken down into: the free entitlement hours; additional private paid hours; food charges; non-food consumables charges and activities charges.

The government says local authorities must ensure that providers offering funded places do not charge top-up fees (the difference between their normal charge and the funding they receive from the local authority).

It also says providers offering funded places should not charge extra for: materials such as paper and toys which are necessary for the effective delivery of childcare; business running costs; registration fees and non-refundable deposits as a condition of taking up funded places; and general charges such as non-itemised enrichment charges  or sustainability charges.

The guidance says providers may charge parents for consumables such as nappies or sun cream, meals and snacks and extra optional activities, but parents must be able to opt-out of paying these charges. Providers can charge parents for additional, private paid hours but taking these hours must not be a condition of accessing a free place.

The guidance also says there should be no artificial breaks in the entitlement hours – for example a provider cannot offer 10am to midday and 1pm to 3pm as entitlement hours and only offer paid hours in between.

Them Local Government Association (LGA) welcomed the guidance, calling it “an important milestone”. Arooj Shah, chair of the LGA’s Children and Young People Board, said: “We know that charging for consumables has made access to places more difficult for some families, with complex guidance making it difficult for councils to effectively challenge providers in this area. It is extremely helpful that guidance is now being clarified.”

 “The majority of nurseries are already following best practice on being clear with parents about their offer and what any extra charges are, associated with the funded childcare offer,” said Purnima Tanuku, NDNA chief executive.  “The funding government pays to providers has never been about paying for meals, snacks or consumables, it is to provide early education and care. In the current economic climate, taking away the flexibility for providers around charges could seriously threaten sustainability.”

Neil Leitch, chief executive of the Early Years Alliance, said: “While we fully agree that families should be able to access early entitlement hours without incurring additional costs, in reality, years of underfunding have made it impossible for the vast majority of settings to keep their doors open without relying on some form of additional fees or charges.  

 “As such, while it is absolutely right that providers should be transparent with parents on any optional additional fees, today’s guidance does absolutely nothing to address – or even acknowledge – the fundamental financial challenges facing the sector.”  

He added:  “So, while today’s guidance may rightly make charges clearer for parents, it does not take away from the fact that unless the government takes urgent action to tackle sector underfunding, many providers will still have no choice but to increase the price of any non-funded hours parents take up or optional extras they purchase – or risk facing permanent closure.”