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by Jess Gibson

The government’s plans to extend the early entitlement offers to one- and two-year-olds continue to prioritise supporting working parents rather than directly aiding the most disadvantaged, low-income families, according to a report by the Institute for Fiscal Studies (IFS). 

forms part of the IFS’ annual series of updates on education spending, funded by the Nuffield Foundation.  

The report states that “the poorest third of families will see almost no direct benefit from the new entitlements”, while the volume of disadvantaged two-year-olds eligible for a funded early education place has halved between 2015 and 2023. 

It also notes that while the new entitlements will directly benefit just over half of parents with a child aged between nine months and two years, families earning less than £20,000 a year will only account for a fifth of this, with the remaining four-fifths comprised of families with household incomes above £45,000.   

The research additionally states that, while funding rates for children aged two and under are set to be significantly above what the private market charges in 2024-25, funding for three- and four-year-olds will be 11% lower in 2024-25 than in 2012-13. 

The IFS warns that with government set to pay for up to 80% of early years provision in England, it is vital that funding rates for these entitlements are set at the correct rate. 

Elaine Drayton, IFS Research Economist and an author of the report, said: “Childcare providers have seen significant increases in their costs over the last decade, but funding rates have failed to keep pace. Core hourly funding for 3- and 4-year-olds fell by 17% in the decade leading up to 2022–23, once rising costs of provision are taken into account. As the free entitlement expands, the government will be setting the price for more and more formal pre-school childcare hours – and the risks of getting the funding rates wrong will just get bigger and bigger.” 

Commenting, Neil Leitch, CEO of the Early Years Alliance, said: “There is a wealth of research showing that children from poorer backgrounds benefit the most from quality early education and care – and yet, as this report rightly highlights, the upcoming 30-hour expansion is set to exclude these children almost entirely.    

“For all ministers’ talk of the need to ‘close the gap’ between disadvantaged children and their peers as early as possible, the government has made it very clear that this policy was created to encourage parents to return to work, rather than ensuring that all children can access a high-quality early education.   

“Let’s be clear: early years provision is more than just childcare. It is vital education, delivered at the most crucial period of a child’s learning and development.  

“In no other area of education would we accept the idea of children’s fundamental access to education being determined by their parents’ earnings – so why is it acceptable in the early years?”