Why Isn't My Nursery Bill Going Down Even With 30 Free Hours?
By Clear Nursery Fees Team · 5 January 2026
You registered for 30 funded hours. You handed the code to the nursery. The invoice arrived looking almost exactly the same as before.
You are not imagining it. This is the most common shock parents in England face, and the reason is structural: the government pays nurseries one rate, nurseries charge parents another, and nobody explains the gap.
The nursery funding gap: what the government actually pays
When you access funded hours, your local authority (LA) pays your nursery a per-hour rate set by the Early Years National Funding Formula (EYNFF). In 2025-26, the national average is approximately £6.12 per hour for 3-4 year olds, and slightly higher for younger children.
The nursery funding gap is the difference between the per-hour rate a local authority pays a nursery for funded childcare (averaging £6.12/hr for 3-4 year olds in 2025-26) and the nursery's commercial rate (typically £9-£14/hr). Parents are not charged for funded hours directly, but nurseries recover the gap through optional charges on top.
Your nursery's commercial rate for the same hours is typically £9-£14 per hour, and higher still in London and the South East.
The gap between those two numbers is the nursery funding gap. Nurseries cannot charge you a direct top-up on funded hours, but that gap has to close somewhere. It closes through the charges listed below.
What nurseries are allowed to charge on top of funded hours
Meals and snacks. Nurseries can charge for food during funded sessions, typically £3-£6 per day. They must offer a free alternative (you bring your own food) and cannot bundle meals into the hourly rate.
Consumables. Nappies, wipes, sun cream and similar items can be charged if itemised. You must be allowed to supply your own as an alternative.
Enhancement fees or supplementary charges. Some nurseries charge a per-hour supplement on funded hours to cover costs the LA rate does not fully fund. This is legal only if it was disclosed in your contract before you enrolled and is genuinely optional. You cannot be required to pay it as a condition of receiving funded hours.
Additional hours above your entitlement. Hours beyond 30 per week are charged at the nursery's commercial rate.
Holiday sessions. The 30-hour entitlement covers 38 term weeks per year, approximately 1,140 hours annually. Sessions outside those weeks are billed at the full commercial rate.
Why the bill stays high: a worked example
A family in the South East, using 40 hours per week for 51 weeks, at a nursery charging £13 per hour:
- Annual funded hours: 1,140 (30 hours x 38 weeks)
- Remaining paid hours: (40 x 51) minus 1,140 = 900 hours
- Cost of those 900 hours: 900 x £13 = £11,700 per year
- Meals at £5/day x 5 days x 51 weeks = £1,275 per year
Total bill: over £12,000 per year, even with 30 funded hours.
Funded hours reduce what you pay. For families using full-time care, they rarely eliminate the bill.
What you can do about it
Check your LA's funding rate. Your local authority publishes its EYNFF rate. The closer it is to your nursery's commercial rate, the smaller the gap. Rates in northern and rural areas are often closer to local commercial prices.
Use Tax-Free Childcare on paid hours. For every £8 you deposit into a Tax-Free Childcare (TFC) account, the government adds £2, up to £2,000 per year. You cannot use TFC on funded hours, but you can use it on everything you pay commercially.
Review your invoice. Enhancement fees and consumables must be itemised and must have been disclosed before you enrolled. If a charge appears that was not in your original contract, raise it with the nursery manager. If that fails, escalate to your LA's early years team.
Consider stretched funding. Instead of 30 hours across 38 term weeks, you may be able to take roughly 22 hours per week across 51 weeks. This reduces holiday week bills, though it gives you fewer hours during term.
Frequently asked questions
Can my nursery charge a top-up on funded hours? Not directly. Nurseries cannot charge a per-hour top-up as a condition of receiving funded hours. They can charge optional enhancement fees, but these must be disclosed upfront and you must be free to decline them.
Why does my LA rate matter? The LA rate is what the government actually pays your nursery. If your nursery charges £12 per hour and your LA pays £6.50, your nursery makes up the remaining £5.50 through optional charges and paid hours. A higher LA rate means a smaller gap.
Does Tax-Free Childcare affect my funded hours? No. TFC and funded hours can be used together. Use funded hours for your entitlement and TFC to pay for the commercial top-up.
The Clear Nursery Fees calculator uses the actual EYNFF rate for your LA to show your specific net cost after funded hours, Tax-Free Childcare and Universal Credit support.