Question to the Department for Education:

To ask the Secretary of State for Education, whether she has made an assessment of the potential impact of Government subsidies for childcare on the cost of childcare for people who are not eligible for subsidies.

For families with younger children, childcare costs are often a significant part of their household expenditure, which is why improving the cost, choice and availability of childcare for working parents is important to the government.

From April 2024, working parents of 2 year olds will be able to access 15 hours of free childcare per week for 38 weeks of the year. This transformative roll out will benefit the parents of up to 246,000 children who have been issued 2 year old funding codes, of which 195,000 have been validated to date.

From September 2024, this will be extended to working parents of children from nine months to 2 year olds. From September 2025, all working parents of children aged nine months up to 3 years will be able to access 30 hours of free childcare per week. The expansion of this entitlement will save eligible parents up to £6,900 per year per child helping even more working parents with the cost of childcare and making a real difference to the lives of those families.

The income eligibility criteria are applied on a per parent basis. To be eligible, parents will need to earn the equivalent of 16 hours a week at National Minimum or Living Wage, which is £183 per week or £9,518 per year in 2024-2025, and less than £100,000 adjusted net income.

For families with two parents, both must be working to meet the criteria, unless one is receiving certain benefits. In a single-parent household, the single parent must meet the threshold. The £100,000 level was chosen to correspond with income tax thresholds and to be easily understandable for parents. Only a very small proportion of parents, 3.1% in 2023, earn over the £100,000 adjusted net income maximum threshold.

The eligibility criteria apply to the existing entitlements and were debated in, and agreed by, Parliament. The maximum income limit applies to both Tax-Free Childcare and 30 hours free childcare, which allows parents to apply for both schemes through the same online application (Childcare Service).

However, the universal 15 hours of free childcare offer remains in place for all parents of 3 and 4 year olds, regardless of parental circumstances, including those who earn over £100,000.

Working families can also access support with the childcare costs through Tax Free Childcare worth up to £2,000 per year for children aged up to 11, or £4,000 per year for children aged up to 17 with disabilities. For every £8 paid into a Tax-Free Childcare account, the government tops it up with another £2.

There is a comprehensive evaluation programme underpinning the expansion of childcare entitlements. This includes a process evaluation which will explore how families not eligible for the new entitlements experience finding and accessing childcare, including the associated costs. Further, the impact evaluation will assess how the expansion has impacted upon the quality of childcare provision and children’s development, for all children, and wider family outcomes. As per Government Social Research guidelines, evaluation findings will be available within 12 weeks of the projects being finalised. The department expects the first to be available from spring 2026.