The extent to which parents are unable to access the free 15 hours without paying additional fees was highlighted during last month's Public Accounts Committee hearing on the findings of the National Audit Office report on the free entitlement for three- and four-year-olds.
The NAO report, published in February, looked at whether the Department for Education is providing value for money in delivering the free entitlement for education for three- and four-year-olds.
Speaking to delegates at the ICMEC seminar at the University of East London last week, Neil Leitch, chief executive of the Pre-school Learning Alliance, gave a provider perspective on ongoing issues with funding the 15 hours.
Delegates also heard from Julian Wood, the National Audit Office client director of education, who gave an overview of the NAO report's conclusions.
Mr Leitch, who gave evidence to the Public Accounts Committee, said he was amazed that issues regarding funding raised during the hearing appeared to be news to MPs.
'We in the sector know that none of this is news and perhaps it suits everyone to ignore the issue, because there is simply not enough money in the system to deliver on the rhetoric,' he said.
Mr Leitch also spoke about his own experience when he was recently looking for a nursery for his three-year-old, as there was no Alliance nursery in his area.
After finding a nursery he liked and told that they offered the free entitlement he said he would like to take up five three-hour sessions a week, and was surprised to be given a list of fees.
When he stressed that he only wanted the 15 hours he was told the provider had always charged top-up fees and that no parents were able to receive the free entitlement without paying a top-up fee.
Mr Leitch said 15,000 children went through the provider, which he described as a 'fairly substantial organisation' every year (pre-school and primary).
When he queried this with the provider's chief executive and asked if there were any circumstances when they would provide the free entitlement without asking for extra fees, he said he was referred back to the terms and conditions.
This backs up anecdotal evidence that many parents are still unable to claim the 15 hours completely free and that the practice of charging top-up fees to parents is still prevalent.
Mr Leitch said he had told this story when he gave evidence to MPs at the Public Accounts Committee hearing.
During the meeting chair Margaret Hodge also quoted examples directly from discussions on Mumsnet, which she had found from a brief search on the morning of the hearing.
Examples she gave to MPs included parents being sent invoices for 'voluntary donations', including a mother who had been billed £1,000 for a term for 14 hours a week at a nursery when her daughters were supposedly receiving the free entitlement.
Tom Jeffery, the permanent secretary at the Department for Education, said that he would look into these cases.
Mr Leitch said this showed the practice of top-up fees was not policed and in some areas was actually condoned. He said there was a conflict, as he knew that providers do not receive enough money to deliver the service.
He said, 'I know that there are many providers who constantly struggle to do the right thing and it jeopardises their entire operation.
'And I also know that if every parent received the free earlyyears entitlement in the way in which it was intended, the system would simply crumble.
'Providers would collapse and Government would then be left to pick up the pieces.'
He said, 'That is why we need to follow up on the commitment by the DfE to look at costs.
'We need to ensure families get what they are entitled to, which means local authorities must pay an equitable rate and that central Government needs to provide sufficient funds for distribution.'
He added, 'At long last we have a credible report that endorses what many providers have been stating for years.'
The Public Accounts Committee is due to publish its response to the report shortly.
Mr Jeffery also confirmed at the meeting that the department would be publishing data to show how local authorities are setting the Early Years Single Funding Formula in their areas.