Free Childcare Reform Has ‘Little to Offer the Poorest Families’: Report

James Laurie, aged 8, is assisted in his online work by his mother Laurette as he continues home schooling in London, on Jan. 25, 2021. (Leon Neal/Getty Images)

Expansion of subsidised childcare announced by Chancellor Jeremy Hunt earlier this year does little to help poorer families, a new report has revealed.

Instead the government prioritised parents or carers who work rather than low-income families, according to the Institute for Fiscal Studies (IFS).

In March, the government called the changes to childcare subsidies a “childcare revolution.” It introduced new measures that will extend the 30 hours a week subsidised childcare to children as young as 9 months old.

This is currently available only for the parents in England of children aged 3 to 4.

From April 2024 working parents of children aged 2 will get 15 hours of free childcare, and that will be extended in September 2024 to 15 hours of free childcare for working parents of children aged 9 months to 3 years old.

The final phase—which will come into effect in September 2025, after the next general election, will see the offer increased to 30 hours.

The IFS report on budget reforms showed that the bottom 30 percent of the income distribution would see almost no direct benefit from the proposals.

Only a fifth of families, earning less than £20,000 a year, would be eligible for the new entitlements. It compares to four-fifths of households with incomes above £45,000.

The report also looked at the existing financial support for parents of 2-year-olds. When a child reaches age 2, they may be eligible for 15 hours of funded early education for 38 weeks of the year, if parents already receive some level of government support.

The IFS said that the share of eligible disadvantaged 2-year-olds fell from nearly 40 percent in 2015 to just over a quarter in 2022.

Josh Hillman, director of education at the Nuffield Foundation, which funded the research, welcomed the new measures announced by Mr. Hunt, but added in a statement that it was “disappointing” to see a “significant drop in the number of disadvantaged two-year-olds that will be eligible for free childcare.”

All About Jobs

The new entitlements will shift who is paying for care, the report found. New reforms will see an additional 65,000 parents into full-time work, according to the Office for Budget Responsibility.

The IFS estimated that five-sixths of the new funding will pay for care that parents would have otherwise paid for themselves.

The report’s author, Christine Farquharson, said that the new entitlements are a “another big step towards an early years system focused on helping parents to work.” They are much less about reducing inequalities in children’s development, she added.

The government has been focused on creating more jobs and getting people into employment. Prior to being elected as prime minister and serving as chancellor, Rishi Sunak said that Downing Street’s clear goal was to “protect, support, and create jobs.”

With record high number of people out of employment in August, the government’s ambition to change the unemployment trend could be further buffered by the childcare funding for working families.

Faced with criticism that new funding will do little to motivate women, unable to work because of expensive childcare, the government referred to another introduced measure.

Mr. Hunt said that parents on Universal Credit who get a job or increase their hours would be paid in advance, rather than in arrears, something which has been suggested is a major barrier for single mothers on low incomes.

The maximum they can claim for childcare would be increased by almost 50 percent to £951 for one child and £1,630 for two children.

A government spokesperson noted that by 2027/28, Downing Street expected to be spending £8 billion a year to help parents with affordable childcare.

“On top of this we’re investing more than £3.5 billion to help thousands, including parents, return to work and grow the economy,” the spokesperson added.

Chris Summers contributed to this report.