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300,000 parents miss out on free childcare

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Only half of the 600,000 families in England that the government said would be eligible for 30 hours of free childcare have benefited so far, according to analysis by insurer Royal London.

Last week, education minister Nadhim Zahawi told parliament that 340,000 children have so far benefited from the government’s childcare scheme, which was launched in September 2017.

The policy extended the existing 15 hours of state-funded childcare for all three and four-year olds to 30 hours for families. Parents are eligible if they both work more than 16 hours a week and individually have a taxable income under £100,000.

When former prime minister David Cameron first announced the scheme in June 2015, he said it would benefit up to 600,000 families. However, this figure was lowered to 390,000 families by the time the scheme launched.

Royal London has factored in the potential for some families to have more than one eligible child because they either have twins or children who are close together in age. The insurer points out that the government’s own figures suggest the policy is failing to help around 300,000 families it had originally claimed would benefit.

If the government’s reduced estimate of 390,000 families is taken into account, this still means that 50,000 families have not accessed the scheme during its first year.

Why are parents missing out?

Royal London suggests the scheme has failed to reach thousands of eligible families as a result of inadequate funding from the government via local authorities. This has left nurseries and childminders facing an average shortfall of £2,166 per year per child if they participate in the scheme.

As a result, many childcare providers have decided to limit the number of places they have for children of parents who are claiming the 30 hours of funding.

Others have cross-subsidised the offer by charging higher fees to parents of younger children, introduced additional ‘contributions’ to cover the higher costs, made redundancies or decided to close their doors.

According to government figures, only 34,250 childcare settings including childminders, provided the 30 hours of funding last year out of a total of 81,500 providers in 2018. The number of childcare providers in England has also fallen by close to 10% since 2016.

Before government support is applied, the average monthly cost of a full-time nursery place totals around £1,000 in England. When the 30 funded hours are factored in, two full-time working parents requiring 50 hours of childcare per week could pay around £400 a month, according to the Family and Childcare Trust’s 2018 survey.

Becky O’Connor, personal finance specialist at Royal London, commented: “It is shocking that an initiative designed to benefit 600,000 families is reaching barely half of those who it was designed to help. By underfunding this policy, the government could ironically end up reducing access to affordable childcare for all parents.”