Government Plans to Redirect Unspent Free-Childcare Funding to Help Low-Income Families

The Department for Education (DfE) has announced a consultation proposing that councils must allocate more of the unspent funding for government-funded childcare hours to nurseries and childminders. The change, slated for implementation from the 2027/28 financial year, aims to reduce extra charges for meals, nappies, sun cream and transport that many families currently bear.

iNews

Since September 2025, eligible working parents of children aged nine months to four years in England have been entitled to 30 hours a week of free childcare during term time. Parents on certain income-related benefits or with an Education, Health and Care Plan (EHCP) for special educational needs and disabilities (SEND) receive 15 hours for two-year-olds. Councils receive funding based on projected uptake, but a National Day Nurseries Association (NDNA) analysis found that 75 percent of 132 local authorities left £65 million unspent at the end of 2023/24. That money is often diverted to cover shortfalls in other education and health services.

iNews

Ipsos polling for the DfE shows that 44 percent of the lowest-income parents find additional nursery charges difficult to afford. The consultation cites areas such as Westminster and Southwark where councils have already used unspent funds to cover food costs, noting that “support with food costs can save parents at least £350 a year, and for families with multiple children, these costs can make a substantial difference to household budgets.” The DfE frames the move as a way to address barriers like transport in rural areas and to ensure the 15-hour entitlement reaches families that need it most.

iNews

Jonathan Broadbery, policy director at the NDNA, said the plan could lower parental costs by increasing the amount of funding that nurseries receive, adding that “there’s a knock-on effect to parents if there are fewer things that providers have to cover outside of the funded hours.” Neil Leitch, chief executive of the Early Years Alliance, called the current underspend “completely unjust” and argued that any measure that redirects funds to providers is positive, while also stressing that “additional investment was needed to address the financial pressures facing the sector.”

iNews

• “Support with food costs can save parents at least £350 a year, and for families with multiple children, these costs can make a substantial difference to household budgets,” — consultation document

iNews

• “The Government said it was “important” that funding for the 15 hours was used to help families with barriers such as the additional cost of food at nurseries.” — consultation document

iNews

• “There’s a knock-on effect to parents if there are fewer things that providers have to cover outside of the funded hours, either through the charges to parents for non-funded hours or through the charges that they have to make because so much of what they do isn’t covered by the funding,” — Jonathan Broadbery, Policy Director, National Day Nurseries Association

iNews

• “Neil Leitch, chief executive of the Early Years Alliance, said: “It feels completely unjust that that money is not spent where it was destined to go.” — Neil Leitch, Chief Executive, Early Years Alliance

iNews