CMA launches consultation on early years childcare market study

The Competition Markets Authority (CMA) has launched a market study into early years childcare, assessing whether the market is operating effectively for children, parents and providers while supporting employment and economic growth.

The CMA is the regulatory body responsible for promoting competition and protecting consumers in the UK, with statutory powers to intervene in essential markets it considers to be failing consumers.

Background to the market study

As HCR Law reported in June 2026, the Rt Hon Bridget Phillipson MP, Secretary of State for Education, wrote to Sarah Cardell, the Chief Executive of the CMA, to request an independent review of the English early years childcare market.

The Secretary of State noted that providers may find it harder to remain sustainable where demand for parent-paid additional hours is lower. Some parents, she wrote, continue to report high costs despite increased government support following completion of the funded hours expansion in September 2025.

Building on the CMA’s recent action across essential markets such as infant formula, road fuel, dentistry and veterinary services, the Secretary of State asked the CMA to consider conducting a review of the early years childcare market and to publish a final report by spring 2027.

There are over 53,000 childcare providers in England, delivering childcare and early years education for children aged 0-4, with an estimated 1.6 million places. The sector in England is worth approximately £14 billion to the economy annually. Expanded, government-funded support now plays a major role, with around £8.91 billion of taxpayer funds spent in 2025-26.

Launch of market study

On 1 July 2026, the CMA launched its market study. Sarah Cardell said:

“We’re going to take a close look at where change may be needed as part of our commitment to support economic growth and household prosperity, so the system works well for families and providers alike.”

Scope of market study

• The CMA has confirmed that the market study will engage providers in England only. This narrow jurisdictional scope is a result of the differing funding arrangements and regulations already in place in Scotland, Wales and Northern Ireland. The CMA has committed to engage with devolved governments to gather their input and ensure these insights are shared.
• The proposed scope of the market study assessment is broad and will look at:
• Access to high-quality services, including availability of places, how well provision meets different needs and any barriers to entry or expansion for businesses
• Affordability and funding, including how prices, affordability for families and provider sustainability are shaped by costs and government funding
• Information and choice, including whether families can access and use information effectively when choosing childcare and if this is affected by market practices
• The role of local authorities, mayoral combined authorities and other regulatory levers
• The impact of provider types, ownership structures and operating models on choice, costs and market outcomes
• The CMA has also indicated that it will pay particular attention to the role of government policy and public bodies. Where appropriate, it may make recommendations intended to improve outcomes for families, providers and the wider sector.

Timeline of market study

The CMA is currently inviting written representations and feedback on its early years’ education and childcare market study. Separate calls for views are open to families, providers, and other interested parties. All responses must be submitted by 26 July 2026.

The CMA is also holding launch webinars to explain how the study will run, what it means for the sector and how interested parties can engage throughout the process.

Following the launch phase, the CMA expects to undertake initial evidence gathering and analysis between July and December 2026. This will include engaging with providers, stakeholders and sector experts, analysing market data, international comparisons, and working closely with UK and local governments and regulatory bodies.

The CMA intends to consult on its emerging thinking and any possible options for improving outcomes between December 2026 and April 2027, before publishing its final report in May 2027.

The CMA welcomes interested persons to sign up to their mailing list to receive updates about the market study, and you can find further information on how to join the launch webinars here.

How we can help

The CMA uses a range of regulatory tools in its investigations into essential markets and can compel businesses to produce internal data and information on pricing and business strategies within strict timeframes.

If you operate in the early years childcare sector, you should ensure you have robust record-keeping and data systems in place to support timely responses to CMA requests during a market review. You should be prepared to act promptly when responding to requests for information.

Our Education team can support you in identifying the information or data required and compiling a comprehensive response to the CMA’s requests.