The analysis found that just over two thirds (68 per cent) of disadvantaged families are taking up their entitlement of 15 hours free childcare a week for two-year-olds.
This is lagging behind the government’s target of between 73 per cent and 77 per cent take-up.
There is wide local variation, the NAO found, with the most deprived areas of England recording the lowest rate of take-up.
The lowest take-up rate is in Tower Hamlets (39 per cent) compared with Stockport, where almost all (97 per cent) eligible families access the entitlement.
Variation within local authorities was also found, particularly in Essex, Kent and Lancashire.
Lack of awareness of the entitlement in deprived areas is a key barrier, according to the NAO.
Just 72 per cent of eligible families in the 20 per cent most deprived areas of England are aware of their free childcare entitlement, compared with 91 per cent in the least deprived areas.
Today’s NAO report shows wide variation in access to quality #earlyyears provision, with those in more deprived areas more likely to miss out.— EPI (@EduPolicyInst) March 13, 2020
Failing to address these disparities risks widening the disadvantage gap – we welcome calls to improve accessibility. https://t.co/fz9sjaTVzg
Councils are legally required to ensure there are enough childcare places for families in their area.
However, a Coram Family and Childcare survey last year found that less than two thirds (63 per cent) of councils said their area has enough childcare places for disadvantaged families.
Too few councils are incentivising local providers to expand provision for disadvantaged families, added the NAO.
The NAO is calling on the government to work closely with councils to increase take-up of free childcare entitlements in deprived areas.
Ministers also need to make better use of data on regional variations in take-up, the NAO states, adding that it wants to see this research look at whether additional charges in place by nurseries are putting disadvantaged families off.
Most parents are using the universal 15 free hours of #childcare for 3&4-year-olds. But for disadvantaged 2-year-olds, DfE has missed its aspiration for 73% -77% of parents to take up 15 free hours of childcare a week. pic.twitter.com/RrFIu5llDj— National Audit Office (@NAOorguk) March 13, 2020
Government funding does not cover meals, extra hours or additional activities. A Department for Education survey in 2018 found that 74 per cent of childcare providers have additional charges in place.
“Families with young children across the country are benefiting from their entitlement to free early education and childcare places, which aim to prepare children for school and improve their life chances,” said NAO head Gareth Davies.
“However, if these entitlements are to help level the playing field, it is essential that more disadvantaged children benefit from high-quality childcare.
“DfE should do more to ensure that all disadvantaged families are aware of the free childcare on offer and are able to access it.”
The report has been welcomed by Early Years Alliance chief executive Neil Leitch for highlighting “the shortcomings of current childcare policy when it comes to supporting disadvantaged families”.
“Despite all the government’s talk of improving social mobility, the fact is that wealthier families are much more likely to benefit from so-called ‘free childcare’ than those from disadvantaged backgrounds,” he said.
“As such, it’s clear that the government must do much more to ensure that all families are not only aware of their childcare options, but also able to actually access affordable, quality places.
“With early years funding levels still woefully inadequate, many childcare providers are being forced to increase private fees or charge more for additional goods and services in order to stay afloat – meaning that for many families in need, ‘free childcare’ is anything but.”
The House of Commons public accounts committee chair Meg Hillier added: “This NAO report shows take-up of the government’s childcare offer by the poorest two-year-olds has fallen, with the DfE failing to meet its target.
“Parental awareness, take-up and quality of the childcare offer is much lower in poorer areas. If unchecked, the gap between rich and poor will grow.
“The government calls this free childcare. But the reality is that 74 per cent of providers make additional charges and some providers effectively force parents to pay extra.”
Shadow early years minister Tulip Siddiq, said: “People in the least well-off areas are being hit hardest by the Tories’ chronic underfunding of early years.
“Very little progress has been made in reducing the development gap between the richest and poorest children, and the NAO has confirmed that this is linked to the fact that the availability and quality of childcare is lowest in the most deprived areas.
“It was shocking to see no mention of early years in the Budget, at a time when childcare costs are soaring and many providers face closure. The government is failing the next generation and does not appear to want to do anything about it.”