Summary: Mr X complained the Council failed to properly oversee a nursery's charging arrangements for funded early education. The investigation found the Council failed to properly assess the nursery's charging arrangements once concerns were raised. This caused avoidable financial loss, distress, uncertainty, and time and trouble. The Council agreed recommended actions to remedy the injustice caused.

The complaint

1. Mr X complained the Council failed to properly oversee a nursery's charging arrangements for funded early education. He says the nursery required parents to pay mandatory consumables charges and later enrichment charges in addition to funded childcare. He says the Council failed to identify and address these charging arrangements sooner and initially accepted a revised charging policy which did not comply with the statutory guidance.
2. Mr X says he incurred avoidable financial loss, experienced distress and uncertainty, and spent considerable time and trouble pursuing the matter.

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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. 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(1), as amended)
5. Under our information sharing agreement, we will share this decision with the Office for Standards in Education, Children’s Services and Skills (Ofsted).

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How I considered this complaint

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

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What I found

Relevant legislation and guidance

8. Section 7 of the Childcare Act 2006 places a duty on local authorities to secure prescribed early years provision free of charge for eligible children.
9. The Early Education and Childcare Statutory Guidance, issued under the Childcare Act 2006, sets out local authorities' responsibilities for delivering funded early education. It says local authorities should work with providers to ensure funded places are delivered in accordance with the statutory framework and take appropriate action where concerns arise about providers' compliance.
10. The guidance says funded early education places must be free at the point of access. Providers must not charge parents "top-up" fees. Providers may charge for meals, consumables and additional activities, but these charges must be voluntary. Parents who are unwilling or unable to pay must still be able to access their funded entitlement. Providers should also ensure any additional charges are clear, transparent and itemised. (Paragraphs A1.32-A1.44)
11. The Council's Local Provider Agreement requires providers delivering funded early education to comply with the statutory guidance and the conditions of the free entitlement.

What happened

12. Y attended a nursery using funded early education hours from September 2024.
13. The nursery charged parents a consumables fee of £2 per funded hour. Information provided to parents stated funded hours were "not free" and attracted this charge, except for certain vulnerable families. Parents were not offered the option of declining the consumables charge whilst continuing to access funded childcare.
14. The nursery introduced revised charging arrangements in June 2025. These included an enrichment charge and an opt-out policy.
15. Mr X subsequently raised concerns with both the nursery and the Council that the revised charging arrangements did not comply with the statutory guidance.
16. The Council engaged with the nursery and worked with it to amend the opt-out arrangements.
17. The Council initially concluded the revised charging arrangements complied with the statutory guidance because parents could opt out of the additional services.
18. The Council later obtained legal advice which questioned whether the revised arrangements allowed parents to make meaningful choices about optional services and whether the charges were genuinely voluntary. Following that advice, the Council secured further amendments to the nursery's charging arrangements.
19. Mr X became concerned during the dispute that Y could lose their nursery place because of the disagreement over additional charges. The Council discussed this issue with the nursery and later gained legal advice which confirmed a child's funded place should not be withdrawn because of a dispute about optional charges.
20. The Council supported the nursery in offering Mr X a refund relating to some of the charges incurred after September 2025. However, it did not secure or provide a remedy for the consumables charges paid between September 2024 and September 2025.

Analysis and findings

21. The evidence shows the nursery informed parents that funded hours were "not free" and required payment of a consumables charge of £2 per funded hour. There is no evidence parents could decline these charges whilst continuing to access their funded entitlement.
22. The Council first became aware of Mr X's concerns in June 2025. It then had a responsibility to consider whether the nursery's charging arrangements complied with the statutory guidance and, where necessary, take appropriate action to ensure compliance.
23. The Council engaged with the nursery promptly after receiving Mr X's complaint and worked with it to amend the opt-out arrangements.
24. However, the Council initially concluded the revised enrichment policy complied with the statutory guidance because parents could opt out of the additional services. The Council's own later legal advice identified shortcomings in that assessment, including whether parents could make meaningful choices about optional services and whether the charging arrangements were genuinely voluntary. The Council subsequently required further amendments to the nursery's charging arrangements.
25. It is not necessary to determine whether every aspect of the revised policy complied with the statutory guidance. However, the evidence shows the Council's initial assessment did not fully consider the relevant requirements of the guidance. This was fault.
26. The Council also accepted it did not have a comprehensive system for monitoring providers' charging arrangements before concerns were raised by parents. While councils are not expected to proactively audit individual providers' charging arrangements, this demonstrates the Council generally relied on concerns being raised before reviewing the providers' charging arrangements. This provides important context to the complaint but does not mean the Council is responsible for reimbursing charges incurred before it became aware of Mr X's concerns.
27. Following further consideration and legal advice, the Council secured amendments to the nursery's charging arrangements and supported a refund for some of the charges incurred after Mr X complained. However, there is insufficient evidence that Mr X has been reimbursed for all additional charges paid after the Council was notified in June 2025.

Injustice

28. The Council's flawed assessment of the nursery's charging arrangements meant Mr X continued to pay additional charges after bringing his concerns to the Council, when the Council could reasonably have intervened to put matters right. He also experienced avoidable uncertainty while the Council reconsidered whether the charging arrangements complied with the statutory guidance, together with avoidable time and trouble pursuing his complaint.

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Action

29. Within one month of our final decision, the Council agreed to:
• Apologise to Mr X for the injustice caused. We publish guidance on remedies which sets out our expectations for how organisations should apologise effectively to remedy injustice. The organisation should consider this guidance in making the apology I have recommended in my findings.
• Work with Mr X to calculate the additional charges he paid between June 2025 and December 2025 that are the subject of this complaint and reimburse 50% of the verified amount, less any sums already refunded or credited in respect of those same charges. The Council may ask Mr X to provide any reasonable evidence required to verify the payments.
• Pay Mr X £200 to recognise the distress and uncertainty caused by the faults identified.
• Pay Mr X £100 for the time and trouble caused in pursuing his complaint.
30. Within three months of our final decision, the council agreed to:
• Prepare and implement an action plan to strengthen its oversight of providers delivering funded early education. The action plan should include a review of how the Council assesses concerns raised about providers' charging arrangements to ensure decisions fully consider the statutory guidance; clear guidance for officers on assessing providers' charging policies, including whether additional charges are genuinely voluntary, transparent and appropriately itemised; and confirmation that the revised arrangements have been communicated to relevant officers.
31. The Council should provide us with evidence it has complied with the above actions.

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Decision

32. I find fault causing injustice. The Council has agreed actions to remedy injustice.

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Investigator's decision on behalf of the Ombudsman