The number of disadvantaged two-year-olds registered for 15 hours of government-funded early education has dropped by nearly 33,000 from 148,800 in 2019 to 115,900 in 2024, according to government statistics.
Experts have blamed the 22% decline on a range of factors including falling birth rates - with the estimated population of all two-year-olds decreasing by 18% since 2015 – and outdated eligibility criteria for the scheme, which this year marks a decade in existence.
Several causes
Sector figures have also said static income thresholds have seen the number of disadvantaged parents that are eligible to register for the scheme decline.
This has meant that the proportion of parents eligible for the scheme has fallen from the 38% lowest income families in 2015 to the 27% now.
Rebecca Montacute, head of research and policy at the Sutton Trust, says: “The income thresholds used to determine eligibility haven’t changed since 2014, meaning that in real terms a family’s income now has to be far lower to qualify. There have also been wider welfare changes which have reduced the number of families who can qualify, as well as a fall in the birth rate.”
Tammy Campbell, director for early years, inequalities and wellbeing at the Education Policy Institute (EPI), agrees that welfare changes have affected the number of eligible children.
“The move to Universal Credit has impacted the number of families who receive welfare benefits that qualify them for funding,” she explains.
The previous government launched a funded childcare scheme earlier in the year, which saw all eligible two-year-olds of working parents offered 15 hours of funded care per week in April. This was set to increase to 30 hours per week for children aged nine months and above from September 2025.
On why uptake has decreased, James Hempsall, managing director of Coram Hempsall’s, says that the increasing range of childcare programmes means the scheme needs to be reassessed.
“The government needs to decide how the policy fits alongside the new early years space,” says Hempsall. “It has great potential to be a stepping stone into universal early education at three-years-old, and childcare for working parents from nine-plus months.”
Broader outlook
Despite the drop in the number of two-year-olds registered for childcare, the proportion of children registered has gone up to 75% of those eligible. This represents a recovery from the low of just 62% in 2021 following the impact of the pandemic.
Yet disadvantaged families are still most likely to miss out on childcare if income thresholds don’t change, says Montacute.
“Recent early years policy has been focused on expanding access for higher income families,” she says. “At age two specifically, there will now be a group of families who are not disadvantaged enough to access the existing 15-hour offer, but who do not qualify for the new 30-hour offer, with those children receiving no time in funded early education.”
Neil Leitch, chief executive of the Early Years Alliance, says the decrease “marks a worrying direction of travel”, which requires policy change.
“With the sector now in the midst of an expansion that is set to disproportionality benefit families with higher incomes, alongside a growing squeeze on places, there’s a real risk that unless we see a change of policy direction, those children who stand to benefit the most from early education will find it difficult to access it,” says Leitch.
The EPI’s recent research highlighted that attainment gaps have widened for children with special educational needs and disabilities (SEND) compared to their peers, with persistently disadvantaged pupils – those eligible for free school meals for at least 80% of their school lives – almost two years behind by 16.
To close the attainment gap, Leitch emphasises that “political focus on delivering equitable access to early years provision has never been more vital”.
Campbell echoes this, adding: “As low-income children are more likely to benefit from high-quality early education and care, the fact that proportionally fewer are accessing funded places seems to be a move in the wrong direction, with the potential to widen disparities.” She also calls for income thresholds to be raised.
Rising demand
The newly elected Labour government pledged to create more than 3,000 nurseries in existing primary schools, yet this was not in the King’s Speech.
Montacute believes a core entitlement of 20-30 hours of childcare a week, regardless of parental income, would be a good change and offer more flexibility for providers. However, she recognises nurseries are struggling to cope with rising demand from the expansion of the funded entitlements.
“We have heard some concerns anecdotally that nurseries and pre-schools may feel economic pressure to prioritise children eligible for a greater number of hours,” Montacute says.
“Given it will take time for the sector to expand during the roll-out of the funded hours expansion, competition for limited places may become even more competitive.”
Purnima Tanuku, chief executive of the National Day Nurseries Association, says funding needs to be kept equal with delivery costs to ensure a positive future for childcare.
“We need to ensure that funding is keeping up with delivery costs for providers so they remain sustainable for families and can also focus on maintaining high quality,” she adds.
Moving forward
Moving forward, Hempsall believes work needs to be done at local authority level to tackle falling registrations.
“The funding model needs to acknowledge the additional tasks for practitioners and providers associated with working with children who meet the criteria and include enhancements to invest in services for children with SEND or developmental delays – where there is evidence it is needed,” he says.
“Local authorities should be supported and resourced, and be required to deliver outreach and brokerage work with families to ensure they take their places.”
Hempsall also notes the importance of giving support to local authorities so they can deliver successful childcare.
“This programme still requires sustained local effort to target, inform, raise awareness, reach, engage, and broker use of places,” he explains. “That needs resources in local authorities, and the ability to work regularly with partners who have family facing professionals.
“Resources have been tight, and capacity challenged, and so that has reduced the local ability to build or maintain momentum. But there is still a huge place for the policy to deliver on multiple outcomes.”
