Summary: There was no fault in the enforcement action the Council took against an early years provider after Mr X reported that the provider was unlawfully charging ‘top-up’ fees to parents of children with free nursery places. The Council followed its compliance procedure properly and required changes of the provider which brought its practice in line with government guidance. The Council’s decision that the provider’s additional fees did not amount to ‘top-ups’ was made without fault and therefore we cannot question it.

The complaint

1. Mr X says the Council failed to enforce the statutory guidance on working parents’ entitlement to funded childcare. He says the Council did not stop his daughter’s (Y’s) nursery provider charging ‘hourly supplement fees’ which were, in effect, ‘top up’ fees (which the statutory guidance prohibits).
2. Mr X says the increased nursery fees have caused him a financial injustice. He wants lower fees, and for the council to properly enforce the statutory guidance.

Back to top

The Ombudsman’s role and powers

3. 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 significant injustice, or that could cause injustice to others in the future we may suggest a remedy. (Local Government Act 1974, sections 26(1) and 26A(1), as amended)
4. 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)
5. We investigate complaints about councils and certain other bodies. We cannot investigate the actions of private nursery providers. (Local Government Act 1974, sections 25 and 34(1), as amended)
6. 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 s34H(1), as amended)

Back to top

How I considered this complaint

7. I considered evidence provided by Mr X and the Council as well as relevant law, guidance and policy.
8. Mr X and the Council had an opportunity to comment on my draft decision. I considered any comments before making a final decision.

Back to top

What I found

Law, guidance and policy

Government guidance: ‘Early education and childcare’

9. This statutory guidance tells councils how to discharge their duties in relation to the provision of free early years childcare.
10. At the time of Mr X’s complaint, a previous version of this guidance was in force (from 1 April 2024 to 31 March 2025).
11. Children of eligible working parents were entitled to 570 hours of childcare each year. This worked out as 15 hours per week during term time.
12. The funding was intended to deliver free, high quality, flexible childcare. It was not intended to cover the costs of meals, other consumables, additional hours or additional services.
13. Early years providers could charge for meals and snacks as part of nursery places which were otherwise funded by the government. They could also charge for consumables, such as nappies or sun cream, and for services such as trips and specialist tuition.
14. Providers were supposed to be completely transparent about any additional charges when parents first took up free places. Their literature should have included information about fees for consumables, additional hours and services. And their invoices should have included clear, transparent and itemised information about additional fees.
15. At the time of Mr X’s complaint, the guidance did not say that additional fees must be ‘voluntary’ (which previous and subsequent versions of the guidance did say). But providers were nonetheless responsible for providing parents with options for alternatives to additional charges, including allowing parents to supply their own meals or nappies, or waiving or reducing the cost of meals and snacks.
16. Providers were not allowed to charge parents ’top-up’ fees (any difference between a provider’s normal charge to parents and the funding they received from the local authority to deliver free places).
17. It was councils’ responsibility to ensure providers were delivering free places properly and in line with the guidance.

Case law (February 2025): R (Bournemouth, Poole and Christchurch Council) v Local Government and Social Care Ombudsman [2025] EWHC 224 (Admin)

18. In this case, the Administrative Court held that the expression ‘top-up fee’ can apply to any mandatory fee which is levied on parents in addition to the government funding – even mandatory fees for food and activities. This could include:

“… a fee … which seeks to bridge any part of the gap between the fee the nursery gets from the local authority and the fee that the nursery would charge parents on a private basis.”

The Council’s provider agreement: ‘Funded education for eligible children’ (April to August 2024)

19. The Council’s agreement, which applied to Y’s nursery provider, set out the Council’s expectations of how providers would meet the terms of the statutory guidance.
20. Providers had to:
• be clear with parents (in their admissions literature and in advance) about additional services and charges;
• offer parents alternatives to paying additional charges; and
• itemise invoices so additional charges were clear to parents.
21. Providers could not charge parents “top-up” fees for funded hours of childcare. The Council defined a top-up fee as “the difference between a Provider’s usual fee and the funding they receive from SCC to deliver funded places”.
22. Providers could, however, charge for consumables and other services.

The Council’s ‘Early years FEE funding complaints and compliance process’

23. The Council’s compliance process was split into five stages:
• Stage 1: Compliance enquiry received. The Council would request that the enquirer discuss things with the provider first. If they had already done so, they could request that the Council investigate.
• Stage 2: The Council would request information from the provider, such as invoices, terms and conditions, and other relevant literature.
• Stage 3: The Council would discuss the enquiry with the provider and, if necessary, would hold a meeting with them to establish information for the investigation.
• Stage 4: The Council would consider the information received, would make a decision and would communicate that decision to the enquirer and the provider. This communication would include any necessary actions for the provider.
• Stage 5: If the provider was given actions to complete, the Council would then review whether it had done so.

What happened

24. In early 2024, Y’s nursery provider changed its pricing structure. Its standard hourly rate, for children of all ages, was £9.30. Parents of children in receipt of government funding did not need to pay that rate, but had to pay for “additional expenses” not covered by the government funding. The provider referred to this as a ‘parent contribution charge’.
25. The parent contribution covered “unique extras” provided by the nursery, including “Essential care products … Our education programmes … [and] Expert Nutrition”.
26. The parent contribution was significantly higher for three-year-old children than for two-year-olds. No explanation was given for this in the pricing document.
27. In March, Mr X wrote to the provider for clarity on its new fees. He queried the disparity for two- and three-year-olds. He asked for an itemised breakdown of the additional fees and asked if parents could avoid paying them.
28. The provider told Mr X that the parent contribution amounted to £0.79 per hour for two-year-olds and £3.24 per hour for three-year-olds. It said this was because it delivered extra services to older children to help prepare them for school, including PE and other activities, and it received less money for them from the government.
29. Mr X told the provider that the total funded hourly rates for two- and three-year-olds (when parent contributions were added to government funding) amounted to £9.32 and £9.29 respectively. As the standard unfunded hourly rate was £9.30, he believed the parent contributions clearly amounted to top-ups and therefore breached statutory guidance.
30. The provider considered Mr X’s correspondence as a complaint but decided its pricing structure was within the terms of the Council’s provider agreement.
31. In August 2024, Mr X wrote to the Council about the nursery provider’s new pricing. He set out his belief that the parent contributions amounted to top-ups. He asked the Council to investigate his concerns.
32. The Council sought documentation from the nursery provider and then, in September, met with them. It then wrote to Mr X with its decision.
33. In that decision, the Council said the definition of a top-up fee was the difference between a provider’s usual fee and the government funding they received to deliver free places.
34. The Council said that, as the provider’s parent contribution did not amount to an exact difference (in that it was out by a few pence), it was not considered to be a top-up fee.
35. The Council also said the provider’s terms and conditions said its parent contribution covered a number of supplies and services in addition to what was covered by the government funding, such as snacks, meals and specialist tuition. It said providers were entitled to do this.
36. However, the Council said the provider had not properly made these additional costs clear in its literature or its invoices, and it needed to take action on this point.
37. The Council also wrote to the nursery provider, and said it needed to:
• Include a breakdown of the parent contributions in its pricing literature, in line with the Council’s provider agreement.
• Explain, in its literature, the difference in parent contributions for two-and three-year-olds.
• Itemise its invoices so parents could understand how their parent contribution was being spent.
38. The nursery provider updated its fee document and its invoices and provided these to the Council. The Council decided that these updated documents were compliant with its provider agreement. In January 2025, it wrote to the provider to confirm this, and noted that:
• The provider’s literature now included a breakdown of additional charges.
• It also gave parents an alternative if they did not want to pay the additional charges.
• The new invoice template clearly itemised the additional charges.
39. The Council ended its investigation and took no further action against the provider.
40. Mr X says the provider changed its fee policy again in September 2025, and he has no complaints about the current system.

My findings

41. The statutory guidance defines a top-up fee as any difference between a provider’s normal charge to parents and the funding they receive from the government to deliver free places.
42. Providers are not allowed to charge top-ups. But they are allowed to charge parents for consumables and other things not covered by the government funding, as long as these additional fees are itemised and explained in advance, and as long as parents are given an alternative to paying the fees.
43. Y’s nursery provider did not give Mr X the right information about its additional fees in advance. Nor did it give him an alternative to paying the fees. But private nursery providers are not in the Ombudsman’s jurisdiction. I can recommend no remedial action from anything which arose from mistakes by the provider before the Council was made aware of them.
44. The matter I must consider is whether the Council acted properly once it found out about Mr X’s dissatisfaction with the provider’s new pricing structure.
45. Although the Council does conduct audits of nursery providers, its most recent audit of Y’s nursery prior to Mr X’s complaint was in 2021. So I would not expect it to have known about any issues with the provider’s new pricing structure until
    Mr X raised this as a concern.
46. After receiving Mr X’s complaint, the Council followed its compliance policy. It sought documents from the provider, met with them, and wrote to them requiring them to make changes. It then reviewed the provider’s fees and made a decision on the adequacy of those fees. There was no fault in the process the Council followed in reaching its decision on the complaint.
47. I can understand why the Council’s ultimate decision – that the nursery provider’s parent contribution did not amount to a top-up, because the total funded fee differed from the unfunded fee by a matter of a few pence – was frustrating for
    Mr X. He felt that the nursery provider was taking advantage of a loophole.
48. The above case law now makes clear that a top-up can bridge any part of a funding gap. The fact that it may be a few pence out should not automatically preclude a council from deciding that an additional fee is a top-up.
49. However, this judgment had not been issued at the time of the Council’s decision-making on Mr X’s case. The Council did not have access to the Court’s clarification on how a top-up should be defined.
50. Because of this, I have found no fault in the Council’s reasoning for why Mr X’s additional fees did not amount to a top-up. Furthermore, they were for consumables and other things not covered by the government funding, and they were allowed under the statutory guidance.
51. Private nursery providers can charge whatever fees they want for such things, as long as they itemise and communicate those fees in advance (and offer parents alternatives). It is not for councils to tell them how much to charge.
52. Although Y’s nursery provider decided its additional fees should be almost equal to the shortfall between an unfunded place and government funding for a free place, there was nothing to stop it doing so.
53. The Council decided the provider had not communicated the fees properly and took action to ensure this changed. The action it took was fair and effective.
54. Because of this, I have found no fault in the Council’s handling of Mr X’s complaint.

Back to top

Decision

55. The Council was not at fault.

Back to top

Investigator's decision on behalf of the Ombudsman