For years, in the United Kingdom for example, families have been caught in a tough balancing act: wanting the best for their children, while constantly calculating what they can afford. Nursery care often sat at the centre of that struggle. They are essential, but expensive. Practical, but not always ideal.

But now, something is shifting.

Thanks to expanded government subsidies like Tax-Free Childcare and the 15 Hours of Free Childcare scheme, a new chapter is beginning for families and for nurseries. With more financial flexibility, families aren’t just breathing a little easier.

They’re no longer asking, “What can we afford?”
They’re starting to ask, “What do we really want?”

This shift is reshaping nursery expectations across the country, and for providers, it’s a moment of risk and reward.

Understanding how these changes affect your business is key to adapting to them. Resonate CX, a leading developer of customer experience management solutions trusted by childcare providers, offers practical insights for UK-based nurseries and wraparound care providers. We commissioned a market study, Current Landscape of the UK Nursery Market Research Report 2025, to help you understand how subsidies are shaping customer choices. 

The Impact of Subsidies on Nursery Usage

While 60% of parents said subsidies didn’t change how often they use nursery services, 39% reported increasing their child’s attendance thanks to the extra support. And many weren’t just adding a day here and there — 14% jumped by three full days a week.

Here’s a breakdown of how those increases look:

• 14% added 3 days
• 8% added 2 days
• 7% added 4 days
• 5% added 1 day
• 4% added 5 full days

What does that tell us?

When nursery becomes more affordable, they reinvest time in their child’s development. Often, that means looking for nurseries that can meet a new set of expectations.

This opens up clear opportunities for providers like you. If you have the capacity to accommodate additional days, highlight this ability and let parents know that you can directly respond to their demand for more time. Parents who might have previously limited attendance to save costs are now actively looking to increase it, and they can bring their business to yours, provided you make it easy for them to do so. 

Competition Heats Up: Why Subsidy Changes Trigger Switching

Beyond affecting how families use your service, subsidies can impact whether or not a family stays or switches providers.

According to our market study, a full 54% of parents said they are willing to switch nursery providers in response to changes in financial support.

That’s over half your potential or current families being open to alternatives.

And suddenly, everything counts:

• Is the curriculum engaging?
• Are the meals nutritious?
• Are the hours flexible?
• Are staff proactive and warm?

The implication is clear: when prices are more manageable across the board thanks to subsidies, other factors come into play. That means nurseries clinging to outdated programmes or one-size-fits-all models may lose ground fast to providers offering a more thoughtful, enriched experience.

Where Families Want to Reinvest Their Subsidy Savings

Nursery subsidies empower families to spend what they’ve saved.

According to the research, a remarkable 96% of parents say they are open to reinvesting their savings from nursery subsidies back into nursery services.

Here’s how they prefer to use those extra funds:

• Extra trips and days out
• Nutritious food options
• Wellness initiatives
• Workshops and flexible attendance options

This tells you a lot about modern parent expectations. They’re not necessarily seeking a discount, as they’re more focused on added value. For these parents, enrichment activities and a focus on child wellbeing are becoming major decision points.

If you already offer these kinds of services, now is the time to spotlight them. If you don’t, this data can guide your next investments in your facility. To distinguish your nursery in a crowded field, you can start a cooking and nutrition programme, add occasional wellness workshops, or introduce a rotating schedule of trips and events.

The Opportunity (and Risk) for Nursery Providers

Subsidies have created a level playing field on price. So the edge now lies in value.

That’s why this moment is as much about reinvention as it is about funding. Providers who act on this shift by improving the experience, refining communications, and listening to what families want will lead.

Actionable Strategies for Providers to Stay Competitive

So, how do you stay ahead in this increasingly competitive, subsidy-influenced market? Start by focusing on these practical steps:

• Offer flexibility in attendance and payments. Subsidies create fluidity. Families want options that match their new budgets and schedules. To respond to this demand, allow for custom attendance patterns and offer monthly payment plans.
• Highlight value-added services. Are you offering healthy meals, emotional wellness sessions, or themed learning activities? Make sure parents know. Take photos and videos of these features and highlight them in newsletters, social media, and on-site signage.
• Communicate subsidy benefits clearly. Don’t assume families understand how to maximise their entitlements. Provide simple guides, one-on-one support, or digital calculators to help parents see how they can get the most value from their funding.
• Reposition your nursery as a development partner. Parents want more than supervision. Position your nursery as a partner in their child’s learning and wellbeing journey. This strengthens loyalty and makes your service more resilient to subsidy-driven switching.

Winning in a Subsidy-Driven Childcare Market

Subsidies may have started as financial relief. But they’ve become something more: a catalyst for change.

As subsidies expand, parents are using nurseries more, becoming more selective, and seeking out services that align with their values and aspirations.

This is a moment of opportunity for your facility. Succeeding in this new landscape means going beyond price. Adopting a data-driven approach to decision-making and service delivery is key to staying competitive. 

Whether it’s identifying the most in-demand services, adjusting staffing levels to match usage spikes, or enhancing communication touchpoints, data will enable you and your team to make smarter and more confident decisions that zero in on the challenges you experience. 

Understanding what families want and adapting your services accordingly allows you to not only stay relevant but also to thrive in a competitive and growing market. 

Resonate CX can help you achieve this goal by elevating your customer experience management (CXM) capabilities. Our AI-assisted education CXM platform can help you respond directly to family concerns and strengthen trust, closing the inner loop, and improve your services across the board, effectively closing the outer loop. Together, these actions allow you to shape nursery experiences that not only appeal to families taking advantage of subsidies but also encourage long-term loyalty.