Business development

How free is England’s new Free Childcare Plan for 2-year-olds?

Latest updates about the funded 'free' childcare and what it really means for parents and settings
How free is England’s new Free Childcare Plan for 2-year-olds?
April 3, 2024
Reading time:
a light bulb with the letter p inside it

a black and white image of two hearts

famly icon - piggy bank

a black and white image of two houses



a black and white image of a bunny and a bottle


a black and white heart icon

With Famly since

Even though the expansion of the government’s funded childcare pledge is upon us, there is still a lot of confusion. Parents are not sure if they are entitled to receive it, and are even less sure about how they apply for it. Providers who have only just got their rate, have no real idea how it will affect their occupancy or how they’re meant to handle any discrepancy. And managers throughout the country are ready to tear their hair out…

The government hopes that by extending free childcare to the 2-year-old age group from April - and to all under-5s in 2025 - more parents will be encouraged back into the workplace. But the general feeling across the early years sector is not so much one of excitement, but rather nervousness and fear of f another initiative that promises lots, but falls short of expectations.

The state of childcare in numbers

Research from the Coram Family and Childcare charity, suggests that the annual full-time cost of a nursery place for a child under two is £15,709 – more than half an average salary. This is an increase of £873 since last year, meaning if you live in the east or southeast you could be paying 54p for every pound you earn. For many, their childcare costs are now more than their mortgage. And, all of this is compounded by the lack of available childcare places.

Fewer than a third (29%) of councils across England, Scotland and Wales say they have enough childcare places for children under two – that’s down from 42% last year, while for families living in rural areas, only 16% of councils say there are enough places.

For children with special educational needs, the numbers are even more worrying, with the number of councils saying they have adequate availability of places sitting at just above 8%.

The Early Years Alliance are an excellent study of the impact of all this pressure. The charity has only 41 nurseries left out of its original 132, especially concerning when you consider many of these settings were in deprived locations. 

Nurseries I have spoken to have said that an increase in minimum wage plus the rise in energy costs, and food, have each played a part in forcing their prices up. This has led to some nurseries deciding to not offer the funded hours as they just can’t make the numbers add up. That leads to frustrated parents not able to benefit from the funded hours they are entitled to, understandably reluctant to change a setting once their child has settled even if there is a funded offer down the road. 

The government has said they are responding to what they have been told by parents, that they need the funding to kick in earlier, which is totally understandable. The problem is simply that the sector hasn’t been brought on board, 

 Nurseries are saying that a big part of the problem is not being consulted about the upcoming changes and have been unable to plan in enough detail. The scheme cannot work if there aren’t enough places to go around. Even if the places are funded well, the worst result would be if nurseries, not consulted early enough, decided not to offer the places out of fear of the unknown. 

So, what can families get?

Funded places are being rolled out in stages, with some free hours already being available:

The help you can get depends on the age of your child, and whether you are working, or receiving certain benefits.

Working parents can get:

  • 15 hours free childcare a week for two-year-olds from April 2024
  • 15 hours free childcare for nine-month-olds from September 2024
  • 30 hours free childcare for three and four-year-olds is already available
  • 30 hours free childcare for all under-5s from September 2025

To qualify for the new hours, the majority of parents must earn more than £8,670, but less than £100,000 per year.

Those on certain benefits can already get:

If you are not at work, you might still be eligible for 30 hours of free childcare if your partner works, or you receive certain benefits.

How do families apply for funding?

Parents should apply before the start of the term when their child will be eligible - i.e. before April, September or January.

The deadline to get free hours for two-year-olds in the spring term is 31 March.

If you miss the deadline, you won't be able to start using free hours from April.

So, parents are advised to apply as soon as possible.

Once approved, you'll get a code to give to your officially registered childcare provider.

The government website has details of the deadlines to apply for each age group.

a child playing with his parent in the forest

The big ideas

Will nurseries be taking on some of the application process?

With the changes in funding becoming more complex, many nurseries are using digital platforms such as Famly, to help streamline the process, making the form-filling a simplified process for parents and less chasing for nursery staff, especially when integrated with ‘Funding Loop’, a software tool designed to help parents find and apply for funding in line with their children’s care and education, allowing declaration forms to be completed digitally. The main benefits for parents/carers are:

  • Step by step-by-step instructions
  • Simplified form completion
  • Built-in validation of information
  • Automatic calculations
  • Automatic submission
  • Previous information auto-fills subsequent forms
  • All forms are available for future reference and can be downloaded or printed out.
  • All information is securely stored – security checked by third-party security experts.
  • Funding Loop links directly to your local authorities' funding portal.

Can nurseries charge top-up fees?

Providers are not allowed to charge top-up fees, but the funded hours are only intended to cover the cost of actual childcare.  This means that nurseries are allowed to charge for non-compulsory goods, services and activities such as meals, nappies, sun cream, days out and additional hours.

It used to be stipulated in the guidance that these charges had to be voluntary, however, the guidance (A1.31) now states instead that ‘providers [must be] mindful of the impact of additional charges on parents, especially the most disadvantaged.’

What exactly is allowed and not is dependent on the contract between an individual Local Authority and their nurseries. Beyond consumable charges, some other ways that providers have typically made up for a shortfall between the funded rates and their cost include:

  • Stipulating a minimum total number of sessions attended per week
  • Stipulating a limit on funded places on certain sessions 

Can nurseries limit the number of funded hours they provide per day?

It is not mandatory for early years providers to offer funded places, and providers can also limit the number of funded places being offered. Also, parents are not required to use their full entitlement to receive funding.  For example, parents may only wish to use 20 hours of the 30 available, and hours can be split between more than one provider as long as they are not using more than two sites in one day. 

Can nurseries set a minimum number of hours to be taken up per week?

Funded hours can be provided between 6 am and 8 pm any day of the week, including weekends. There is no longer any minimum session length, and the maximum session length is still 10 hours. There should not be any artificial breaks between funded sessions. Considering this, it is up to the provider to decide how and when they offer parents their entitlement. There is no mandatory pattern of delivery, and providers do not have to deliver all 30 hours. Some providers might offer a ‘stretched offer’. This provides fewer hours a week but over a longer period of time.  This can be useful as government funding only covers thirty-eight weeks of the year and this will allow parents to literally stretch their entitlement out.  Parents and providers should speak to each other to see how hours can be used in a way that suits both parties.

download pdf

Karen Simpkin is managing director and owner of Sunflower Children’s Centre, Sheffield. Karen has found the process of preparing for the free hours’ entitlement a time-consuming process. Karen says:

‘To be honest, it’s been hard going.  Parents were first issued with temporary funding codes, then the real codes, which made it all a bit confusing for some parents. I’ve just finished putting everything together for our local authority and it’s taken two of us nine hours to get it done – and I’m good at this sort of thing!  I have found the initial process really tedious, to be honest, with lots of parents finding it difficult to complete.

The biggest problems with making the funding process work, right across the sector are underfunding and the lack of new people coming into the workforce.  At Sunflower we do pay a bit over the minimum rate, but chronic government underfunding makes those working in the sector feel terribly disrespected.

Our centre receives just £7.36 per child an hour, with our 1-4 adult to child ratio, which gives us just over £29 an hour for four children.  This isn’t enough, as we have to pay wages, holiday pay, holiday cover, energy costs, repairs and upkeep of the building etc. Something needs to be done to help the sector and at the moment, the funded places initiative isn’t providing the help we need.’

graphical user interface, text, application
Official Danish Government Reopening Advice

Guidance from the Danish Health Ministry, translated in full to English.

Picture of a Guidance document
UK Nursery Covid-19 Response Group Recommendations

The full recommendations from a working group of over 70 nursery chains in the UK.

Please note: here at Famly we love sharing creative activities for you to try with the children at your setting, but you know them best. Take the time to consider adaptions you might need to make so these activities are accessible and developmentally appropriate for the children you work with. Just as you ordinarily would, conduct risk assessments for your children and your setting before undertaking new activities, and ensure you and your staff are following your own health and safety guidelines.

Customer story

Top tips from Alphabet House

Get top tips from a setting just like yours. Hear from Alphabet House on why and how they use Famly - and why they’ve never looked back.

Read their story