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Next phase of free childcare scheme ‘significantly more challenging’

Next phase of free childcare scheme ‘significantly more challenging’
Paloma Kubiak
Written By:
Paloma Kubiak

The Government had to work at pace to roll out the expanded free childcare scheme to benefit working parents. However, the next phase faces “challenges” and “uncertainties”, an official report suggests.

An “ambitious” timetable was set for the Government in the expansion of the free childcare scheme for working parents in England, first announced in the March 2023 Budget.

This meant the Department for Education (DfE) had to work at pace to deliver the benefits quickly.

However, according to the National Audit Office (NAO) report on the scheme, while the department is on track to meet its April 2024 milestone, there is “significant uncertainty around feasibility, costs, and benefits”.

Further, due to restrictions on Budget announcements, the DfE could not consult with the early years sector beforehand, so “it set timelines without knowing local authorities’ or providers’ capacity and capability to deliver”.

The biggest barrier to the expansion remains “insufficient staffing”, according to the NAO.

Free childcare scheme expansion

In the March 2023 Budget, the Government announced the “largest-ever expansion of free childcare”, offering up to 30 hours per week of funded term-time care to all children in working families in England from the age of nine months by September 2025.

Currently, eligible working parents of three- and four-year-olds can access 30 hours of childcare support.

The free childcare expansion programme was set to roll out in the following phases:

  • April 2024: Up to 15 hours for eligible working families in England with a two-year-old.
  • September 2024: Up to 15 hours for eligible working families in England with a child aged between nine and 23 months old.
  • September 2025: Up to 30 hours for eligible working families in England with a child from nine months old up to school age.


The Government said hundreds of thousands of parents will be able to access support with childcare costs for the first time, saving those using the full 30 hours from September 2025 nearly £7,000 per year.

As at 17 April, parents had been issued codes to claim funded places for 246,833 children, with 195,355 (79%) validated.

The DfE expects this to rise further to 85%, though a timescale for this is uncertain now.

Staff vacancies vs demand for child spaces

Meanwhile, approximately 85,000 new places by September 2025 to meet demand, with the department acknowledging it may be “problematic” to meet future milestones “given uncertainties regarding the sector’s capacity and staffing”.

Recently, the staff-to-child ratio for two-year-olds reduced to 1:5. However, more than 90% of 152 local authorities cited a lack of early years staff as a problem, while 63% highlighted a lack of staff with appropriate qualifications.

The hourly funding rates for local authorities have increased by an average of 4.7% for 3-4-year-olds, and from £6 to £8.28 per hour for two-year-olds.

However, the DfE estimates that, by September 2025, the early years workforce would need to expand by around 40,000 full-time equivalent (FTE) staff. This represents a 12% increase in existing staff numbers in just over two years, “which is ambitious, given the workforce only increased by 5% between 2018 and 2023”, the NAO noted.

NAO recommendations

It highlighted the “risks of unintended consequences” with large numbers of new or less-qualified staff entering the workforce, and a widened attainment gap between children from more affluent families compared with disadvantaged peers.

The NAO therefore recommends that the DfE continues to monitor the implementation of the expansion scheme, “so the expansion does not negatively impact or displace those children who may be more challenging or costly to support”.

Further, it wants the department to measure the impact of revised funding rates on staff and early years places.

Gareth Davies, head of the NAO, said: “Despite the crucial role providers will play in delivering these reforms, consultation with the sector was hampered by the restrictions that apply when developing budget proposals. DfE then cancelled early testing plans, which exacerbated the significant uncertainty about the sector’s capacity and financial sustainability.

“The next phase of the reforms will be significantly more challenging, with little contingency and flexibility in its ambitious timetable. The department must monitor the programme closely and respond promptly to emerging risks.”

‘We have taken decisive steps’

A DfE spokesperson said: “This Government is delivering the largest-ever expansion of childcare in England’s history.

“The NAO rightly acknowledges that we have already exceeded our target for the first phase of the roll-out, with almost 200,000 two-year-olds already benefitting from Government-funded places – supporting parents to balance their career and childcare.

“We have taken decisive steps to prepare the sector for the next phases, including increasing funding well above market rates, launching a workforce campaign and new apprenticeship routes, as well as providing £100m of capital funding to help expand or refurbish facilities.”