Funded Early Education - Inclusion or Inequality for Disadvantaged Two-Year-Olds?

The entitlement to 15 hours of early education for disadvantaged two-year-olds was introduced in England to help narrow early gaps in learning and development. Originally developed under New Labour, it was expanded nationally by the Coalition Government in 2014, reflecting a shared political consensus that investing early is the most effective way to reduce inequality. Left unaddressed, early gaps become harder and more costly to close later in life.

Take-up of what has now been rebranded the offer for Families Receiving Additional Support (FRAS) grew steadily until 2020, when Covid-19 disrupted participation across the board but particularly among disadvantaged two-year-olds. While it rose to 74% in 2023 and 75% in 2024, new data shows a drop to 65%. As Claire Crawford explains in another blog, the 2025 figure is not fully comparable with previous take-up rates, as some disadvantaged two-year-olds may be ‘missing’ if they’ve accessed the working-family entitlement instead. However, experts had long warned that expanding working-family entitlements risked reducing take-up among disadvantaged children and worsening inequalities.

Drawing on our Nuffield-funded research and international evidence, this blog examines why disadvantaged children miss out and whether measures announced in Best Start in Life, the government’s early childhood strategy, can help remove barriers.

A Web of Barriers

International evidence mirrors the picture in England: disadvantaged children, including those from low-income families or with additional needs, are less likely to benefit from funded early education due to a mix of structural and social barriers.

Availability of provision is a major issue. Disadvantaged children are more likely to live in what Ofsted has described as “childcare deserts” – areas lacking sufficient early education places. But our research has shown that even in better-served areas, access is not guaranteed. Many providers operate business models geared toward working families who pay for extra hours and services. We found large nurseries, with over 100 places, offering only one or two funded places for disadvantaged two-year-olds.

Children with additional needs face further challenges. Families told us they struggled to find settings willing or able to support their child. Local authorities confirmed this in the latest Coram Family and Childcare Survey, reporting widespread gaps in SEND provision. Places for this group are also unevenly distributed, Department for Education data shows that in 2024, 16–17% of children in school-based and voluntary settings had additional needs, compared with 10% in for-profit settings.

Eligibility and application processes also present obstacles. A targeted offer requires complex systems to identify eligible families, and some, especially those marginalised or less engaged with services, are inevitably missed. Applying can be difficult for parents with limited literacy, English, or digital access.

Trust and perception matter too. In some communities, cultural norms favour family care over formal early education. Negative experiences or perceived stigma can reinforce this. Parents told us they felt stigmatised when asked by nurseries if they were “on benefits” before being told if there were vacancies, or when required to pay for meals or activities they couldn’t afford. Some described a two-tier system, with funded and fee-paying children separated into different rooms or offered different resources. Other families were offered reduced hours because their child had additional needs. In these cases, early education doesn’t feel like a welcoming opportunity – it feels like another system that excludes them.

What Works Locally

Take-up among disadvantaged two-year-olds varies considerably across local authorities, from below 50% to over 90%, suggesting that their actions can make a big difference. Our research included case studies with 18 local authorities where take-up was considerably higher than expected, given levels of local disadvantage, the labour market, and state of early education services. We explored what they were doing differently.

Consistent with international evidence, a strong early years strategy made a crucial difference. While family support services had been cut across England, these areas invested in inclusive systems, outreach, and partnership working. They maintained a focus on disadvantaged children, even as national priorities shifted. Successful approaches included:

• Gathering data from multiple sources to reduce the risk of missing eligible children.
• Engaging all family-facing professionals, from librarians to health visitors, to promote the offer and support families to take it up.
• Tailoring support to family needs – from light-touch help to intensive assistance with applying for the entitlement and securing a nursery place.
• Working with trusted community partners, including Parent Champions – local parent volunteers trained to support and inform other families. This mirrors successful models such as Germany’s District Mothers or Māori and Pasifika partnerships in New Zealand.
• Offering additional support to providers serving disadvantaged children and who provided genuinely free places.

These examples show that local leadership, coordination, community engagement and a focus on inclusion can make a difference, and reflect some of the measures announced in Best Start for Life.

The expansion of Best Start Family Hubs, to ensure greater consistency in how services work together alongside co-production with parents, could help scale up these approaches. Statutory targets for take-up are also likely to help keep disadvantaged children and early education on local leaders’ agendas. Our research also identified the value of:

• Separate funding to local authorities to support take-up, rather than funding deducted from the government grant to pay providers for the entitlement.
• Funding local authorities to provide peer learning and share good practice for supporting take-up among disadvantaged groups.

The Challenges of Delivering Through a Market

England’s early education system is largely delivered by for-profit providers, with a shrinking voluntary sector. International research shows that without strong regulation, childcare markets favour more affluent families.

In England, underfunding and deregulation have led to a fragmented system where “free” hours often carry extra charges. Providers prioritise fee-paying families, limiting access for disadvantaged children. Our research warned these issues would worsen with the expansion of working-family entitlements and rising demand from working families.

In April 2025, statutory guidance clarified that additional charges for funded hours must be voluntary, and Best Start in Life signalled closer market monitoring and the potential for further regulation. Yet it remains unclear what more evidence is needed to show that, without regulation, the market will not become more inclusive. In fact, all the evidence suggests it is increasingly geared toward meeting the needs of more affluent families.

Conditionality is another tool used internationally to ensure public funding supports inclusion, equity and quality. In Belgium, providers receive more funding if they prioritise disadvantaged children and disseminate learning on inclusive practice. In Ireland, reforms tie funding to accessibility and quality standards, including early educators’ pay and qualifications. In Scotland, funded providers must pay the National Living Wage.

In England, the Early Years Pupil Premium (EYPP) for children from low-income families, who are in care or adopted recently rose by 45% to £570 per year but remains well below the school-age Pupil Premium. SEND funding, which is decided locally, varies widely and is often stretched. So far, neither EYPP nor SEND funding have sufficiently incentivised inclusive provision.

Best Start in Life acknowledges these shortcomings and plans to address them through the 2026 early years funding review and testing more effective use of EYPP. It also promises that the autumn 2025 SEND reforms will result in more consistent and adequate funding for settings, but there’s scepticism over whether early years will receive a fair share.

Providers serving disadvantaged communities face increasing financial pressure, due to the greater support needs of the children they serve and the loss of cross-subsidy from fee-paying families who now qualify for working-family entitlements. Our research highlighted the decline of voluntary settings, which play a vital role in inclusive provision in high-need areas. Best Start in Life pledges help for these providers, and our evidence shows that, locally, such support helps to promote inclusion. However, the lack of detail on how this support will be delivered is concerning, particularly given the urgent action needed to make the early education system more equitable and inclusive.

An Increasingly Complex System

New entitlements for working families, from 9 months upwards, have made the system even more complex. Offers now overlap, with different eligibility rules, funding levels and application processes. For families already facing barriers, this is confusing and off-putting.
Best Start in Life proposes simplifying applications. But the international evidence is clear: universal offers drive higher take-up among disadvantaged children. They reduce stigma, streamline access, and reinforce early education as a public good.

Making the 15-hour entitlement for two-year-olds universal would send a powerful signal and eliminate many of the practical and social barriers to access. If income thresholds for the disadvantaged entitlement had been updated to reflect the original aim of reaching around 40% of two-year-olds, the offer would already be close to universal, given that an additional 50% are now eligible through the working-family entitlement.

From Ambition to Action

Reducing early childhood inequalities and achieving the government’s goal for 75% of children to be “ready to learn” by age five by 2028 requires concerted national and local effort.

Best Start in Life identifies key weaknesses, outlines initial reforms, and signals more to come. It also promotes a better balance between child development and parental employment, after years of emphasis on the latter.

There is a substantial body of evidence on how to build high-quality, inclusive early education systems. The government must now turn this evidence into action and deliver on the promise of breaking the cycle of disadvantage.