28th February 2024 All Posts

7 Facts Nursery Managers Should Share with Parents about Childcare Funding

Parents exploring childcare funding entitlements

As a nursery manager, your primary goal is to provide the best care for the children entrusted to you while also supporting parents in navigating the often complex world of childcare funding. Understanding the ins and outs of childcare fees and government funding programs can be daunting for many parents, which is why it’s crucial to equip them with the necessary information to make informed decisions. Here are seven key points that nursery managers should communicate to parents regarding childcare funding:

1. Eligibility for Government funding

Currently, families with children under two years old do not qualify for funded childcare. However, starting from September 2024, eligible working parents of children aged nine months up to three years old will be able to access funding for 15 hours per week of education and care. This extends to 30 hours per week from September 2025.


Families with two-year-old children may qualify for 15 hours of free childcare and education if they receive certain benefits such as Income Support, Income-based Jobseeker’s Allowance (JSA), Universal Credit with a household income of £15,400 a year or less, Guaranteed Pension Credit, Child Tax Credit, Working Tax Credit, or Disability Living Allowance.

Starting from April 2024, eligible working parents of two-year-olds can access 15 hours per week of education and care.

Three to four-year-olds:

All parents can claim 15 hours of free childcare for children aged 3-4, totalling 570 hours per year. For parents working over 16 hours per week with an individual annual income below £100,000, they may qualify for up to 30 hours of complimentary childcare per week. 

Those on Universal Credit can claim back 85% of their childcare costs, with increased support announced from September 2023, allowing parents to request upfront payments and an increase in maximum support amounts.

Understanding these eligibility criteria is essential for families to access the necessary support for childcare and education, ensuring that children receive quality care while parents can manage their work and financial commitments effectively.

2. Benefits of funded childcare

Funded childcare programs play a vital role in supporting the wellbeing and development of children and their families, offering a multitude of benefits that extend beyond just financial assistance.

Firstly, funded childcare alleviates the financial strain on families, providing crucial support that enables them to allocate their resources more effectively. By reducing the financial burden associated with childcare expenses, families can redirect their funds towards other essential needs.

Funded childcare programs contribute significantly to children’s overall development and future prospects. By providing access to quality early years education, the funding helps equip children with essential skills and knowledge that are foundational for their educational journey. From enhancing cognitive and social skills to fostering a love for learning, funded childcare plays a pivotal role in preparing children for future academic success.

Funded childcare enables parents, to head back to work when the time is right for their family. By facilitating parents’ return to work or allowing them to pursue educational or career goals, funded childcare programs can contribute to increased household income and financial stability. This, in turn, has a ripple effect on family dynamics, leading to improved living standards and economic opportunities for the entire household.

3. Where to use early years funding for 2, 3 and 4-year-olds

When it comes to utilising early years funding for 2, 3, and 4-year-olds, parents have various options available to them. This funding can typically be utilised in all OFSTED-registered preschools, nurseries, and childminders who are registered with the necessary regulatory bodies. However, it’s essential to note that individual settings may have terms and conditions regarding the use of this funding. Parents may find themselves limited to specific times of the day when the funding can be applied, and some settings may choose not to accept early years funding at all. Therefore, parents need to enquire about the terms of use at their chosen childcare provider to ensure they understand how the funding can be utilised effectively.

4. Government funding isn’t free

It’s important for parents to understand that while government funding for childcare provides significant support, it doesn’t cover all expenses. The level of funding nurseries receive from the government is often not enough to cover the cost of delivering funded places. Early years providers therefore have the flexibility to charge non-compulsory additional fees for goods, services, and activities beyond the basic delivery of early education and care. These charges might include items such as lunch, trips, or enhanced activities that enrich the childcare experience. 

For instance, some providers may offer the option for parents to either pay for provided meals or pack lunch for their child, although this choice might not be available in all settings due to facility limitations. It’s crucial for parents to be aware of these potential additional charges and understand that they are voluntary. Nursery managers play a vital role in informing parents about these limitations of government funding, helping them budget effectively and plan for any additional expenses that may arise.

By providing transparency about the scope of government funding and associated expenses, nursery managers empower parents to make informed decisions about their childcare options while ensuring that the needs of children are met in a supportive and enriching environment.

5. Stretching funding allowance over the year

Government-funded hours are typically provided across 38 weeks during term time. However, parents have the option to ‘stretch’ these hours over the year, covering 50 weeks with two non-funded weeks in April and December. Parents need to understand this option and its implications, as it can assist them in managing childcare costs and ensuring consistent care for their child throughout the year.

6. Splitting funding entitlement

It’s worth noting that parents have the flexibility to split their funded entitlement between more than one childcare provider, although there are limitations to this arrangement. Specifically, parents can divide their entitlement between no more than two sites in one day. This means that a child could potentially attend a breakfast club and a nursery setting within the same site, or they could attend a maintained school and a private, voluntary, and independent (PVI) provider on two different sites.

If parents choose to split their offer between providers, they must provide their eligibility code and relevant information to each provider involved. This ensures that all providers are aware of the child’s funding entitlement and can coordinate effectively to provide seamless care and support.

7. Checking eligibility and reconfirmation

Parents seeking working family funding must apply for an eligibility code from Childcare Choices. Additionally, they need to sign into their HMRC childcare account every three months to reconfirm their eligibility code. Failure to reconfirm eligibility may result in loss of funding for the following term, leading to additional fees for parents. Therefore, parents need to stay vigilant and proactive in maintaining their eligibility status.

By effectively communicating these seven key points to parents, nursery managers can empower them to make informed decisions about childcare fees and funding, ultimately ensuring the best possible care for their children while easing the financial burden on families.

Using nursery management software or parent communication tools like Connect Childcare’s ParentZone can help facilitate communication processes, enhance transparency, and empower parents with the knowledge and resources needed to navigate childcare funding effectively. By utilising nursery management software, nursery managers can ensure that important facts about childcare funding are understood by parents and carers, ultimately contributing to a more efficient and supportive childcare experience for families.

Some useful links to share with parents and carers:

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About the Author

Content Marketing Executive at Connect Childcare