Why the new ‘free childcare’ rollout is not exactly going smoothly

A new report has confirmed what many suspected: The rollout of funded childcare hours is having some teething problems.

This month marked the first phase of the new system, with parents of two-year-olds newly able to get 15 hours of subsidised childcare.

It has gone okay so far, with 195,355 newly eligible toddlers taking advantage.

But the next stages of the rollout, coming in September 2024 and September 2025, are set to be ‘challenging’, a report by the National Audit Office published today says.

The likelihood of it working as planned has been graded as ‘amber/red’ by the Department of Education, which signifies ‘problematic’.

What are the problems with the free childcare rollout?

Testing of the new system in pilot areas was cancelled, the report revealed, with the government steaming ahead nationwide just hoping things will go to plan (and as the final phrase will be after a general election, maybe they felt they didn’t need to think about it too closely).

It is set to cost an extra £15.2bn between now and 2028, with an extra 40,000 full time childcare staff required (a 12% increase on figures as at July 2023) and 85,000 extra places.

The speed of the rollout is leaving councils struggling to keep up, with research collated last month showing that while 82% of local authorities were confident they could meet increased demand this month, this dropped to 34% for September 2024 and only 9% for September 2025.

‘Providers may also face practical constraints, such as finding staff and physical space for new places,’ the report states. ‘In November 2023, representative bodies told us they have little confidence there will be enough places to meet demand.’

The new support for working parents may increase the attainment gap between affluent families and their more disadvantaged peers, despite the government setting a target of reducing this, the report also warns.

Who is eligible for the new free childcare funded hours?

The government announced last year that by 2025, parents and carers with children as young as nine months would be able to access 30 hours of subsidised childcare every week of term time.

People are only eligible for the support if each parent is earning between certain parameters (or temporarily away from the workplace on leave), which are generally 16 hours per week at the National Minimum wage at minimum, and £100,000 at maximum.

From this month, parents of two-year-olds have been able to access 15 hours of funded childcare per month.

This will be extended to children as young as nine months old in September, and increased to 30 hours per month from September 2025.

Who will lose out?

The Institute for Fiscal Studies calculated that the lowest 30% of the income distribution would see almost no direct benefit from the rollout.

Although extending entitlements to younger disadvantaged children was considered, the government ‘opted not to progress this, given affordability concerns’, the report says.

Meanwhile, the rollout could even harm more vulnerable children already in childcare, because ‘the rapid growth in places may impact quality or displace those children who may be more challenging or costly to support’.

And ‘the risk of a large influx of more inexperienced staff’, alongside changing staff:child supervision ratios, could jeopardise quality.

Higher income families will also not benefit from the help, with an unfairness in the system that means one parent could earn £100,000 and their partner £25,000 but the household be entitled to nothing, whereas a couple earning £99,000 each with a household income of near £200,000 could claim the full amount.

How helpful is it going to be really?

Childcare in the UK is notoriously expensive, with many parents deciding it’s not worth it to go back to work for less money than they would need to pay a nursery or childminder.

Highly anticipated help was always going to be a bit of a damper squib than the ‘free childcare’ headlines suggested, as they are only available for 38 weeks of the year (while most working parents do not stop their jobs when the school term finishes.

Also, the hours are more accurately described as subsidised rather than free, as the funding covers education only and parents may still have to pay additional charges including for food or activities.

Not all nurseries will offer the hours as they may say the funding available from the government is not enough to provide the care they offer.

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