A sharp rise in demand for childcare linked to increased government funding will place more pressure on the childcare system in England, according to new research. Modelling from the think tank Nesta predicts up to a 46% rise in hours spent in childcare for toddlers aged one and two by 2028.

In March, the Chancellor Jeremy Hunt announced that from September 2025 working parents of children aged between nine months and two years will qualify for 30 hours per week of government-funded childcare. Early years specialists at Nesta set out to determine how many early-years professionals will be needed to meet the additional demand.

Key findings include:

• By 2028 when the scheme will be fully operational, there will be 285,000 one year olds and 323,000 two years olds eligible for the scheme.
• The number of hours spent in ECEC (early childhood education and care) will rise by 46% for 1 year olds and 33% for 2 year olds by 2028.
• 27,500 early-years professionals will be needed to meet this demand, an 8% expansion of the current workforce (the sector has lost 3% of the total workforce since 2019)

Additional demand will come from an increase in childcare hours among parents already in work, and from the 60,000 people that the Office for Budget Responsibility estimates will return to work as a result of the scheme.

The Institute for Fiscal Studies estimates that eligibility for the 30 free hours amounts to an effective cash transfer to families of (on average) £80 per week. This may encourage people, particularly mothers, who are currently caring for children to return to the labour market, by making it financially viable for them to do so.

Fionnuala O’Reilly, head of policy in Nesta’s fairer start team, and author of the report said: “We know lots of families are really struggling to afford childcare at the moment. So the expansion of funded hours to children aged nine months is good news and will ease some of the pressure on families.

“But we are about to massively increase demand in a sector that is already struggling. Our research suggests that an expansion of seven to eight percent of the current workforce is needed to meet this demand by 2028. This comes at a time when when the sector is contracting – staffing levels haven’t recovered from the pandemic, the number of graduate level professionals is falling and the number of providers offering free entitlements to families is also declining. Structural changes are needed to turn the tide on these trends, starting with pay and conditions for staff.”

Also announced in the Spring Budget was a relaxation of the four staff to every two-year old ratio.

Laura Jones, senior analyst in Nesta’s fairer start team, and joint author of the report said: “Relaxing the ratio means more children can be looked after by the same number of staff, in theory, but this change is highly controversial. Research has shown that the majority of the sector are against it and even unwilling to implement it. It’s likely to add to the pressures on an already overstretched workforce, make recruitment difficulties more acute, and reduce the quality of care that children receive.”

Additional analysis by the researchers found that the pay of early years professionals is more comparable with those working in retail than other education professions such as primary school teaching. The researchers analysed a novel data set called the Open Jobs Observatory which holds millions of job adverts scraped from a well known aggregator. From 2021-23 the research found that median salaries for early years workers are between £22,500-£25,000. This is significantly less than median salaries in the rest of the education sector and is more in line with professions like retail and hospitality.

Ends

1. For more information on the analysis or to speak to one of the experts involved, please contact Kieran Lowe, Media Manager, on 020 7438 2576 or [email protected]. Spokespeople are available for broadcast interviews.
2. The number of eligible children by 2028 has been calculated by:

• Using data from UK Household Longitudinal survey data we estimate that 45% of one year olds and 51% of two year olds in England live in households that are currently eligible based on parents’ current working patterns.
• Combining this with estimates from the Office of Budget Responsibility (OBR) that by 2027-2028 this policy will raise employment by 60,000. This assumes that each person entering employment has one child between the ages of one and two, with an equal number of one and two year olds.
• Using figures from the ONS on the number of 1 and 2 year olds in the population by 2028.

1. The total increase in demand for childcare hours has been calculated by:

• Calculating the percentage change in average childcare hours seen historically amongst three year olds in working families before and after the introduction of the 15 hour and later 30 hour entitlement.
• Applying that percentage change figure to the current level of childcare hours for one and two year olds.
• Combining this with figures on the eligible population.

1. In a survey of 9,000 Early Years Alliance members 9 in 10 said that they will not implement the relaxation of the four staff to every two-year old ratio, as reported by the House of Commons Education Committee in 2023.

About Nesta

We are Nesta, the UK's innovation agency for social good. We design, test and scale solutions to society's biggest problems. Our three missions are to give every child a fair start, help people live healthy lives, and create a sustainable future where the economy works for both people and the planet.

For over 20 years, we have worked to support, encourage and inspire innovation. We work in three roles: as an innovation partner working with frontline organisations to design and test new solutions, as a venture builder supporting new and early stage businesses, and as a system shaper creating the conditions for innovation.

Harnessing the rigour of science and the creativity of design, we work relentlessly to change millions of lives for the better. Find out more at nesta.org.uk