Summary: Mr X complained the Council failed to ensure his child’s nursery provided funded childcare hours free of charge and said the provider instead applied mandatory top-up fees. Because of this, Mr X said that over five months, he was charged £1,173 more than he should have been for childcare hours that should have been free. The Council delayed carrying out an audit into the nursery and this was fault. However it took appropriate action by auditing the provider and instructing it to make changes. The provider still has not made the required changes but this is not due to lack of action by the Council. The Council has agreed to take further steps to bring the childcare provider into compliance.

The complaint

1. Mr X complained the Council failed to ensure his child’s nursery did not charge parents top-up fees for hours of childcare that should have been free. As a result, he said he and other parents had been charged more than they should have been for childcare hours that should have been.

Back to top

The Ombudsman’s role and powers

2. We investigate complaints about ‘maladministration’ and ‘service failure’. In this statement, I have used the word fault to refer to these. We must also consider whether any fault has had an adverse impact on the person making the complaint. I refer to this as ‘injustice’. If there has been fault which has caused an injustice, we may suggest a remedy. (Local Government Act 1974, sections 26(1) and 26A(1), as amended)
3. We consider whether there was fault in the way an organisation made its decision. If there was no fault in how the organisation made its decision, we cannot question the outcome. (Local Government Act 1974, section 34(3), as amended)
4. When considering complaints, if there is a conflict of evidence, we make findings based on the balance of probabilities. This means that we look at the available relevant evidence and decide what was more likely to have happened.
5. If we are satisfied with an organisation’s actions or proposed actions, we can complete our investigation and issue a decision statement. (Local Government Act 1974, section 30(1B) and 34H(i), as amended)
6. Under our information sharing agreement, we will share this decision with the Office for Standards in Education, Children's Services and Skills (Ofsted).

Back to top

What I have and have not investigated

Investigating childcare providers

7. The Ombudsman does not investigate the actions of childcare providers as they are not a body within our jurisdiction in the same way councils are.
8. However councils are subject to some legal duties in relation to local childcare providers and the Ombudsman can investigate whether councils have had regard to these duties.
9. In this case I have not investigated the childcare provider itself. I have investigated the steps the Council took to respond to Mr X’s complaint and its actions to ensure compliance with relevant law and guidance by the childcare provider.

Complaint timeframe

10. I have investigated events from when they began in March 2024 to the date of the Council’s final complaint response dated 16 August 2024. Complaints about any events after this time are new issues and can be raised as a separate complaint.

How I considered this complaint

11. I considered evidence provided by Mr X and Council as well as relevant law, policy and guidance.
12. Mr X and the Council are given the opportunity to comment on my draft decision and all comments are considered before making a final decision.

Back to top

What I found

Law and guidance

Free childcare places

13. In 2024 the Government increased its contribution to the cost of childcare for working parents. The new guidance, “Statutory guidance: Early education and childcare”, came into effect from 1 April 2024.
14. The guidance says that working parents may be able to get free childcare (a free entitlement place) for children aged nine months to four years old, with the hours of funded childcare ranging from fifteen hours to thirty hours per week depending on the child’s age.

Duties on councils

15. The guidance in force during this complaint said councils should take the following action where childcare providers are providing free entitlement places in a council’s area:
• Ensure that providers are aware they can charge for meals and snacks as part of a free entitlement place and can also charge for consumables, such as nappies and suncream and for services such as trips or specialist tuition;
• Not intervene where parents choose to purchase additional hours of provision or additional services, provided that this is not a condition of accessing a free place;
• Ensure that providers publish any fees for consumables and services and make these easily accessible to parents so they can make an informed choice of provider;
• Ensure that childcare providers deliver the free entitlements consistently, so that all children within a setting receive the same quality and access to provision, regardless of whether they pay for optional hours, services, meals or consumables;
• Ensure that providers are completely transparent about any additional charges when a parent first takes up their child’s free place; and
• Ensure that providers do not charge parents “top-up” fees (any difference between a provider’s normal charge to parents and the funding they receive from the local authority to deliver free places).
16. In February 2025 the statutory guidance was updated to further clarify the position that councils must ensure providers do not charge top up fees and that additional fees on top of free entitlement places must be made optional.

Compliance by childcare providers

17. Councils must ensure that providers offering free hours comply with the guidance around charging and can do this by working with providers and instructing them to take action to bring their organisations into compliance.
18. If a childcare provider declines to comply with the guidance after it has been asked to by the council, a council’s main power in this scenario is to suspend or de-register the provider.
19. Whether to take action of this kind, or any legal action, is a matter for councils to decide, not the Ombudsman.

What happened

20. Mr X’s child, Z, was eligible for free funded childcare and attended a nursery.
21. The nursery told Mr X in March 2024 that from April there would be an additional fee for consumables that all parents must pay on top of every funded hour of childcare. The nursery did not say the charge was optional. The amount of additional charge was virtually identical to the difference between the provider’s charge per hour for privately funded places and the funding the provider receives per hour to deliver free places.
22. Mr X told the Ombudsman his preference was not to pay for the consumables and provide these from home instead.
23. Mr X complained to the Council in March 2024. He said the nursery did not say the charges were voluntary or itemise what the charges were for and so this amounted to an unlawful top-up fee.
24. In response the Council said while the nursery was entitled to charge for these items, it agreed the additional charges should be better explained and decided to carry out an audit of the childcare provider. The Council concluded the audit in July 2024 and apologised to Mr X for its delay in carrying this out. This was in part due to delays by the nursery in providing information to the Council.
25. The Council decided that the nursery had not made clear to parents through its terms and conditions and invoices what the additional charges on funded hours were for, or that they were voluntary. The Council asked the nursery to amend those documents to bring it in line with the requirements of the statutory guidance by September 2024.
26. The Council informed Mr X of this through its final complaint response in mid-August 2024. Regarding his request for a refund of the additional costs he paid, the Council said he should ask the nursery directly for this. Mr X asked the nursery and no refund was provided.
27. Mr X’s child stopped attending the nursery at the end of August 2024.
28. Since Mr X complained to the Ombudsman, the childcare provider decided to refund Mr X for the £1,173 in additional fees he had paid over a period of five months.

My findings

Council’s oversight of the childcare provider’s charging policy

29. The law around funding for childcare places was clear during the period Mr X complained of. It said councils must ensure that providers are transparent about additional charges, that charging for consumables must be optional and providers must not charge parents “top-up” fees (any difference between a provider’s normal charge to parents and the funding they receive from the local authority to deliver free places).
30. I have not defined the additional charges in this case as either a ‘top-up fee’ or a non-optional charge for consumables as these terms do not materially change the findings. The question for us is whether the Council ensured that free entitlement places offered by this provider were actually free.
31. When the Council found out the provider was charging parents a non-optional fee on top of the free entitlement hours, it took the action we would expect:
• It identified that the nursery was not informing parents that the additional fees were voluntary and told the provider this was not compliant with the guidance; and
• Carried out an audit of the provider, with deadlines for the provider to comply with its recommendations for changes in its invoices and terms.
32. The Council was delayed in carrying out the audit and this was fault. However the delay was also in part due to the provider’s delay in sending the Council information. The delayed audit caused Mr X frustration and the Council has apologised to Mr X for this through its complaints process. This was appropriate action to remedy the frustration he was caused.
33. Mr X has sent us evidence that the childcare provider is continuing to tell parents that these additional charges are mandatory. The Council is also aware that the requested changes still have not been made. I have therefore recommended action the Council should now take to prevent injustice being caused to others in future.

Others affected

34. Mr X complained that other people with children at this nursery were affected by these non-optional charges and sought a remedy for them. The Ombudsman may investigate matters coming to our attention if a member of the public who has not complained may have been caused an injustice due to council fault. In these cases we may suggest a remedy for those people.
35. In this case, the injustice was not caused by council fault, so I have not recommended that the Council provide a personal remedy to others affected. However I have recommended service improvements to recognise the likelihood of injustice being caused to others.

Back to top

Action

36. Within three months of the date of the final decision, the Council has agreed to:
1. Demonstrate that senior management have taken over the work between the childcare provider and the Council; and
2. Demonstrate what action the Council has taken to prevent residents being charged additional fees on top of childcare hours that should be free, including where there is continued lack of compliance, consideration of whether to de-register the provider.
37. The Council should provide us with evidence it has complied with the above actions.

Back to top

Decision

38. I find fault causing injustice and recommend actions to remedy injustice.

Investigator’s decision on behalf of the Ombudsman

Back to top

Investigator's decision on behalf of the Ombudsman