DfE requests CMA review of early years childcare market

The Secretary of State for Education has asked the Competition and Markets Authority (CMA) to review the market for early years childcare.

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.

Where the CMA identifies concerns or adverse effects on consumers, it can issue advice and recommendations or impose structural, behavioural or hybrid remedies.

DfE request for CMA market review

On 26 May 2026, the Rt Hon Bridget Phillipson MP, Secretary of State for Education, wrote to Sarah Cardell, the Chief Executive of the CMA, requesting an independent review of the English early years childcare market.

The review is intended to support the government’s wider Childcare Review and assess whether the market is operating effectively for children, parents and providers, while supporting employment and economic growth.

Citing ongoing challenges for some parents in accessing high-quality childcare and early education – particularly in less affluent areas and for children with additional needs – the Secretary of State notes that providers may find it harder to remain sustainable where demand for parent-paid additional hours is lower. Some parents, she writes, 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 has asked the CMA to consider conducting a review of the early years childcare market and publish a final report by spring 2027.

CMA response

The CMA confirmed in its response, received the same day, that it has been monitoring developments in the childcare sector and considering further work in this area for some time. It added that its independent advice and recommendations may be particularly impactful as the government continues to develop its childcare policy.

Possible outcomes for businesses

A CMA market review considers whether structural or behavioural features of a market harm competition or consumers. The CMA’s overarching objective is to ensure markets deliver effective competition and work well for consumers. It can:

• Make recommendations to government, including changes to policy or legislation relating to how the industry operates
• Seek voluntary undertakings from firms to change behaviour
• Refer matters for enforcement under the Competition Act 1998 or consumer protection legislation and impose penalties of up to 10% of a firm’s global revenue
• Escalate to a formal Market Investigation Reference if it believes there may be an adverse effect on competition. These industry-wide inquiries can last up to two years, and the CMA can impose behavioural remedies (such as requiring the provision of information to consumers) and structural remedies, including the break-up of dominant companies.

The findings of a CMA market review are published and available for public scrutiny.

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. In particular, you should be prepared to act promptly when responding to requests for information.

We advise clients to seek legal advice at the earliest possible opportunity if they’re contacted by the CMA. Our Education team can support you in identifying the information or data required and compiling a comprehensive response to the CMA’s requests.