Yahoo Finance Free cash for parents: how to save £6,500 on nursery fees with new scheme
More than 250,000 families in England with two-year-olds can now apply for 15 hours a week of free childcare, as the Conservatives roll out extra financial support for parents.
Working parents earning between £8,670 and £100,000 a year are encouraged to register early for the scheme, before it comes into force in April.
The Government’s decision to widen the free childcare net – unveiled in last year’s Spring Budget – aims to ease the huge financial burden hanging over families with young children.
Under the current system, parents with three-to-four-year-olds can already claim at least 15 hours (and many 30 hours) of free childcare per week for 38 weeks of the year (during school term time).
But from April, this is being extended to cater for working families with two-year-old children. In September, it will expand further – enabling 15 hours of free care for children aged between nine months and two years.
Then finally, in September 2025, it will be widened again so that all eligible working parents (apart from those earning more than £100,000) can claim 30 hours a week for children aged between nine months and five years of age (see timetable, below).
Once fully rolled out, the Government expects parents with a two-year-old in care for 35 hours a week to save an average of £6,500 a year – reducing their annual childcare costs by up to 60pc. This will come at a cost of more than £4bn to the Government.
Who will get free childcare?
To qualify for the new two-year-old support package, all parents in a household must work the equivalent of at least 16 hours a week at minimum wage. This is to prevent those not in work from earning the benefit.
Each parent can earn up to £100,000 and still be eligible. For couples, the rules apply to both parents. For example, if one parent earned £101,000 and the other earned £10,000, they would not be eligible for free childcare, but if they both earned £99,000, they would be.
It is expected that 285,000 families will be able to benefit from the first wave of new support for those with two-year-olds.
A further 640,000 parents of children aged between nine months and two years will need to wait until September before they can be eligible for the same 15-hour benefit.
How to claim for free childcare
As of January 2, newly eligible families with two-year-olds can now register on the Childcare Choices page on the gov.uk website. You’ll need a Government Gateway user ID to log in.
Once registered, you’ll get a code which you have to give to your provider - allowing you to receive the 15 hours of free childcare. To qualify for the support, your childcare provider must be registered with Ofsted and signed up to the scheme.
Parents will be asked to reconfirm they are still eligible for the support every three months. The Department for Education says the recommended time to register is between mid-January and the end of February so that parents won’t need to reconfirm eligibility before taking up a place.
The DfE says it takes around 20 minutes to apply online.
How much will it save me?
From September next year when more families will qualify for 30 free hours, the Government has estimated the new policy will save parents with a two-year-old child an average of £6,500 a year.
Education Secretary Gillian Keegan said the new measures will help make sure “parents no longer have to choose between a career and a family”.
The rollout can’t come soon enough for thousands of families who spend huge sums on childcare. In November, research by the Fawcett Society found that about 250,000 mothers with young children had left their jobs over childcare pressures.
Its survey of 3,000 working parents of pre-school children found that one in 10 mothers had handed in their notice, while more than two-fifths had turned down a promotion or career development opportunity because they worried it would not fit in with childcare arrangements.
With such high costs, it is unsurprising the UK is the third most expensive country for childcare among members of the Organisation for Economic Co-operation and Development (OECD) – coming behind only Switzerland and New Zealand.
Are there enough childcare spaces?
The Government is taking a staggered approach in rolling out the scheme, in an effort to ensure childminders and nurseries have time to prepare for increased demand.
More than £400m is being invested in increasing the amount providers receive per “free” hour over the next year, while cash incentives of up to £1,200 are being offered to encourage people to become childminders.
From April, the amount it pays providers to deliver childcare will increase to an average of £11.22 per hour for under-twos, £8.28 for two-year-olds, and £5.88 for three and four-year-olds.
Despite this, there are fears over a lack of supply in the childcare sector. Ofsted figures show childcare providers in England fell by 5pc in the year to August 2023, as nurseries, pre-schools and childminders struggled to absorb inflated energy and food prices.
Neil Leitch, chief executive of the Early Years Alliance, which represents nurseries and childminders, said parents hoping to access funded childcare will be disappointed as they battle to secure spaces for their children.
He said: “With the early years sector facing its worst recruitment and retention crisis in recent memory, many settings simply won’t have the staff needed to deliver places to additional children – and unless funding increases to a level that allows providers to pay early years professionals a decent wage, this is unlikely to change any time soon.”
The Department for Education said it is “confident in the strength of our childcare market to deliver the largest ever expansion in childcare in England’s history”.
A spokesman added: “Our data shows the number of early years staff and places increased in 2023 – but we know there is more to be done. That’s why we will shortly be launching a national recruitment campaign and are looking to introduce a new accelerated apprenticeship route into the sector to help recruit new staff.”
Are you going to go back to work as a result of extra nursery funding? We want to hear from you, email joe.wright@telegraph.co.uk
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