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Published 11 January 2024
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Childcare Funding is Changing This Year: Make Sure Your Family Doesn’t Miss Out

The government’s Childcare Choices scheme is expanding, so more families stand to benefit from 15 or 30 hours funded childcare. But accessing what you’re entitled to isn’t always straightforward. We explain how to claim what you’re eligible for.

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From April 2024, the Government is expanding its offer of free childcare to include working parents of two-year-olds. To be eligible, parents must work at least 16 hours a week, earning at least the National Minimum or National Living Wage, and not more than £100,000 net income per year.

The cost of Early Childhood Education and Care (ECEC) remains a major challenge for working parents, with research by parental rights charity Pregnant Then Screwed revealing that one in five parents in households earning less than £50,000 per year are leaving the workforce due to the cost of childcare.

The announcement that more childcare funding will be available from April – with further expansion of the scheme in September 2025 – no doubt received a warm welcome from parents who stand to benefit. However many families risk missing out due to a confusing online system. We’ve broken down the key facts and dates to be aware of so you can claim the right support.

How is childcare funding changing, and when?

From April 2024, 15 hours of free childcare per week will be available for all children (of working families or those on income support) in England from the school term after they turn two. The 15 hours are technically only available during school term time though some providers may let you ‘stretch’ the hours over the whole year.  

The first group to benefit are the parents of children who will turn two before 31 March this year. Before these changes, funding was only available for two-year-olds if their parents received some form of government support.

Applications opened on 2 January 2024 for eligible families to begin accessing the expanded scheme. Parents can apply directly through the Childcare Choices website.

And from September 2024, funded childcare will be available for younger children for the first time: working families of children aged nine months up to school age, who meet the eligibility criteria in England can claim 15 hours funding from September 2024, increasing to 30 hours funding in September 2025. 

Before the expansion of the scheme, there was no funding available for children under two.

The Childcare Choices scheme is only available for families in England. For parents and carers in Scotland, the funded early learning and childcare offer is similar to the old scheme in England, enabling all 3 and 4 year olds and some 2 year olds to be looked after for “around 30 hours a week in term time.” No expansion to this scheme has been announced. 

In Wales, ‘early education’ and ‘childcare’ are treated differently, with the 30 hours provision for 3 and 4 year olds in Wales comprising “at least 10 hours of early education” and “up to 20 hours of childcare”

In Northern Ireland, funded preschool places of at least 12.5 hours, or 22.5 hours for some children, per week are available for children in the year before they start school. Families can apply for a pre-school place in Northern Ireland through the Education Authority website.

The cost of childcare in the UK 

The cost of childcare has rocketed in recent years, rising faster than wages. In fact, the Institute for Fiscal Studies (IFS) reports that “the cost of a part-time nursery place for a child under 2 grew by 60% in cash terms between 2010 and 2021 – twice as fast as average earnings”.

NerdWallet spoke to Emma, a 34-year-old mum from Staffordshire, who is about to return to work after having her second child. When Emma’s daughter (now 6) started nursery in 2018, the cost was around £40 per day, excluding nappies and milk which parents had to provide. Second time around, Emma expects to pay £60 per day for her son (aged 10 months) to attend nursery when she returns to work this year – an increase of 50%.

Research by Nesta, an innovation agency for social good, found that an hour of childcare in England costs 32% of the average hourly wage (median and before tax). In line with this, Emma expects her childcare bill in 2024 to be around a third of her take-home pay. 

For single-parent families earning the current minimum wage, childcare costs can exceed two-thirds of their take-home salary. 

The changes to the government’s Childcare Scheme mean that Emma’s family will not have to wait as long to benefit from funded hours for their youngest child as they did for their eldest. 

Born in January 2023, Emma’s son will become eligible for 15 hours funded childcare in September 2024 and 30 hours from September 2025.

Finding childcare support confusing? It’s not just you.

The Childcare Choices scheme is not the only form of government support available to working parents: other options include Tax Free Childcare, Tax Credits and Universal Credit (which is replacing Tax Credits). 

In a 2022 report, the Institute for Fiscal Studies (IFS) described the different types of support for working parents as “confusing” and explained that the number of parents taking up the offer of funded childcare varies across the different programmes. High numbers of eligible families are not claiming the 20% government top-up available to them through Tax-Free Childcare, with fewer than 60% of open accounts being used regularly. Tax Free Childcare can be used by eligible families to reduce the amount they pay for childcare over and above their child’s funded entitlement. It’s thought this could be due to the online system being difficult to navigate. 

NerdWallet spoke to Helen Hobbs, Managing Director of Wellies Day Nursery, in North Crawley, a village in South East England. She told us that one of the biggest challenges for parents is remembering to revalidate the codes provided by the government system every three months, to keep their child’s entitlement.

“Some leave it to the last minute not quite understanding that they need to have the codes before the cutoff dates,” said Hobbs. “I remind people because I don’t want them to miss out.”

How to make the most of free childcare 

  1. Check what you are eligible for. For families in England who are unsure which types of support they are entitled to, the government’s childcare calculator is a helpful place to start. This calculator can also be used by families in Scotland and Northern Ireland to give an estimate of the funding they may be able to access. Families in Wales can check their eligibility on the Childcare Offer for Wales website.
  1. Be prepared to join a waiting list. If you’re expecting a baby and plan to use funded childcare in 2024 or 2025, or if you have a child who will become eligible for funded childcare in the next two years, don’t wait to reserve their place with a registered childcare provider, as places can be limited. 
  1. Check the dates to apply for funding (both Tax Free Childcare and 15 or 30 hours funding) and familiarise yourself with the process of reapplying through the online government portal every 3 months. Look out for an email from the Childcare Choices system notifying you when you need to reapply. Your childcare provider may or may not issue reminders to parents, so it’s best to set up your own alerts.
  1. Ask your childcare provider whether you can ‘stretch’ your funded hours throughout the year to help with budgeting. Some settings will only apply the discount during term time (38 weeks of the year), meaning your bills will vary from month to month. Plan your family finances accordingly. 
  1. If you have children at school and are eligible for Tax-Free Childcare or Universal Credit Childcare, these can be used to help cover wraparound childcare costs. More information can be found in the Childcare Choices Guidance Zone.
  1. If you’re not sure how or when to apply for any childcare financial support – ask your childcare provider for guidance. Parents can also subscribe to email updates on the government’s Childcare Choices website.

Image source: Getty Images

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