Funded childcare hours were supposed to encourage parents to return to work but research has shown that this has not been the outcome

The government started to fund childcare for children aged 9 months in September 2024 to encourage people to get back to work. This started at 15 hours but was increased to 30 hours of funded care from September 2025. Prior to the funding, many parents were unable to afford childcare and therefore chose to go part time or give up work completely to care for their children. Many families were seeing their childcare bills matching their take home salaries and therefore there was no financial benefit to work. The government wanted to encourage people to continue contributing to the economy therefore parents who were both employed and earning under £100k each became eligible for 30 hours.

The government hoped that families would use the 30 hours to support their childcare bills and this would encourage them to work more. However, new research based on 2024 figures, suggests that parents are actually working less as a result of these funded hours. The research shows that parents feel that they don’t need to work as many hours to pay the expensive nursery bills now. Additionally, parents who were not working prior to the funding, still are not taking up work opportunities which is not what the government expected nor planned for.

In addition to less people working, many people are also topping up their pensions and taking salary sacrifices to keep within the £100k limit. Once you earn over £100k, you are not entitled to the funding therefore families are doing what they can to ensure that they don’t earn over the threshold. More people than ever are putting large sums of money into their pension which may account for early retirement in 15-25 years’ time from now. This means there will be less people working into their 50s and 60s and so we have to question what the working environment will look like because of this.

The government’s intention was for more people to work and contribute to the economy but it appears that the opposite is happening and the long-term impacts cannot yet be foreseen.

Funded childcare hours were supposed to encourage parents to return to work but research has shown that this has not been the outcome

1. What is the "Universal" vs. "Working Parent" entitlement?

2. Are parents eligible for the funded hours if they are not working?

3. Are there additional costs even for "free" hours?