Soaring childcare costs coupled with new regulation fees for nurseries and childminders could see parents turn increasingly to unregulated childcare, the Professional Association of Nursery Nurses (Pann) has warned.

Young child playing. Credit: Guy Newman

And the forecast economic downturn might increase pressure on parents and cause them to turn their backs on expensive daycare and childminders, the association fears.

Tricia Pritchard, senior professional officer at Pann, said the Department for Children, Schools and Families' current consultation Childcare Act 2006: Future approaches to fees and subsidies could leave providers facing huge hikes in Ofsted fees. Pann estimates some providers could end up paying almost three times more for registration and annual Ofsted fees by 2010.

"The increases will be substantial and if nurseries have to cut back the only place they can cut back on is staffing - they can't cut back on heating, for example, and insurance," Pritchard said. "A lot of private providers already operate with young staff on the minimum wage and we're campaigning for that to be improved and for training to be improved."

The only way for nurseries to meet the costs will be to pass the rise in fees on to parents, according to Pritchard. "Parents are already stretched and nurseries are already reaching the top of the fees scale," she said. "People are saying we're about to have a recession. If people are looking to tighten their belts the first thing that will go will be the perceived expense of childcare. They will then look around for inexperienced, unregulated care."

Steve Alexander, chief executive of the Pre-School Learning Alliance, said he was hopeful the proposed changes to fees would not go ahead. "It's more about how providers manage to make their provision sustainable. That's the challenge and some providers feel if the Ofsted fees structure changes it will be the straw that breaks the camel's back."

He said he was hopeful parents would not turn to unregulated childcare but Pritchard said: "We have seen this in the past, it has happened. Parents will go back to looking at the unregulated unqualified care. That's a real fear of ours."