Major gaps in childcare support leave parents in Further Education with no guaranteed help

Spending on childcare has increased by 41 per cent over the past decade, boosting support for working parents. But major gaps in support mean that parents in education are missing out, with a parent studying in Further Education (FE) in England receiving no guaranteed support, according to new research published today (Saturday) by the Resolution Foundation.

The report Hard Lessons notes that there is a welcome new consensus over the need to invest more in childcare, with a major increase announced at the end of the last Parliament and confirmed in the recent Budget. As a result, childcare spending in England this year (2024-25) is 41 per cent higher in real terms than a decade ago (2014-15) – up from £5.1 billion to £7.2 billion a year (in 2023-24 prices).

However, major gaps in eligibility for childcare support – notably for working-age parents in education – mean that many young families are still missing out on this much-needed support.

The report explains that, as well as the 15 hours of free childcare that goes to all 3-4-year-olds, a parent of a child aged 3-4 working full-time on the National Living Wage would be entitled to a further 15 hours of additional free childcare, as well as some support from Universal Credit (UC) Childcare assistance, which could reach a maximum value of £12,900.

A low-income parent who is studying in Higher Education (HE) is instead entitled to a Childcare Grant (CG). This is broadly comparable to UC childcare, subsidising childcare up to 85 per cent of costs (up to a certain cap). However, they are not eligible for the additional 15 hours of free childcare that working parents enjoy. As a result, the maximum a parent in HE could receive in support for childcare costs is £10,100 for a child aged 3-4.

But gaps in support are most stark for parents studying in Further Education (FE), says the Foundation.

A parent studying for a level 3 qualification or below has no guaranteed entitlement to childcare support (unless they started the course aged 19 or younger). The only recourse for working-age students is to apply for Learner Support (LS), a fund which is allocated at the discretion of cash-strapped FE colleges. But more than one-in-ten colleges offered no support to students with childcare costs in 2022/23, while fewer than one-in-three spent more than 20 per cent of the funding they gave out on childcare costs.

The lower childcare support for parents in education risks creating a ‘parent penalty’ that holds down parents’ earnings throughout their careers, as even a progression from vocational level 2 to BTEC national diploma can boost wages by 32 per cent. The report reveals that, among young adults (aged 19-24), parents are 19 per cent less likely to be in employment, but 72 per cent less likely to be in education, compared to those of the same age who aren’t parents.

However, the report says the Government should smooth over the disjointed elements in our national childcare provision so that it supports all parents who are studying, at an additional cost of £240 million.

The Foundation recommends eliminating the inequalities between different types of working-age student parents by extending the Childcare Grant (currently only available to HE students) to all full-time students regardless of the level at which they are studying, at a cost of around £110 million in 2024/25. Parents with 3-4-year-olds on full-time courses should also be treated the same as working parents, and able to access 15 additional hours of free childcare, at a cost of around £130 million in 2024/25.

While the recent policy consensus around the value of parental employment has led to a welcome expansion of childcare support, the Foundation notes that parental progression must also be a crucial plank of the Government’s upcoming Child Poverty Strategy – given the high number of children living in poverty with working parents in the UK today.

Lalitha Try, Economist at the Resolution Foundation, said:

“A welcome new consensus has emerged on the need to invest in childcare, with spending on childcare in England set to hit £7.2 billion this year. This should boost the incomes of working parents – but major gaps mean that many studying parents continue to miss out, leaving parents studying in Further Education with no guaranteed support for childcare costs.

“Growing inequalities in childcare support mean while a working parent can access up to £12,900 worth of help with childcare a year, a parent who is studying at a Further Education level could receive nothing.

“These policy gaps should be levelled out, at a cost of £240 million to the Treasury, to encourage more parents to continue their education, and boost their skills and pay prospects. This in turn would boost their chances of escaping poverty.”