On 4 December 2017, the DfE launched their consultation setting out their proposed approach to free early years entitlement for two-year-olds in regards to the rollout of universal credit.

Under the new criteria, the government has said a much greater number of two-year-olds would be eligible for free early years entitlement. Furthermore, the new criteria would mean that more disadvantaged two-year-olds would be positively impacted by free early years entitlement.

High-quality early education is universally acknowledged to have long-lasting benefits for pupils, and pupils from disadvantaged backgrounds are likely to have even more to gain from good early years education.

This guidance outlines the key proposals made by the DfE in the consultation document and how the proposed changes will affect early years providers if the criteria in the consultation goes ahead. The proposals have a direct impact on pupils and the management of early years providers; therefore, it is vital that early years providers’ management teams and other members of staff make their opinions heard by registering their views on the consultation.  


Where are we now?

The current eligibility criteria for the free early education entitlement for two-year-olds means that families both in and out of work are eligible for a free place if they receive certain benefits, or if they receive tax credits and their income falls below a certain level.


What does the consultation propose?

The consultation proposes that two-year-olds are eligible for a free early years place if their family receives any of the qualifying benefits for free school meals. These include the following:

  • Income Support
  • Income-based Jobseeker’s Allowance
  • Income-related Employment and Support Allowance
  • Support under Part VI of the Immigration and Asylum Act 1999
  • The guaranteed element of Pension Credit
  • Child Tax Credit, provided they are not also entitled to Working Tax Credit and have an annual gross income of no more than £16,190
  • Working Tax Credit run-on – paid for four weeks after they stop qualifying for Working Tax Credit
  • Universal Credit (regardless of income amount, as a temporary measure during the early stages of rollout).


The Introduction of Universal Credit

Universal Credit is a single payment for people who are looking for work or who are on a low income. Universal Credit aims to create greater fairness in the welfare system and to help more families move out of poverty by making work pay. The government is introducing Universal Credit in stages across the country, to replace the existing benefits with a simpler monthly payment.

Universal Credit is reshaping the welfare system helping people into work more quickly. The simplification of the system means a number of the benefits that currently entitle families to the early education offer for two-year-olds will cease to exist.

The consultation invites views on the proposed approach to setting eligibility for the free early education entitlement for two-year-olds under Universal Credit, which would increase the number of eligible pupils once Universal Credit is fully rolled out, compared to now.


What will this mean?

The government is proposing to amend the eligibility criteria for the entitlement by introducing an earnings threshold for those families in receipt of Universal Credit.

The suggested net earnings threshold is £15,400 per annum. It is important to note that a household’s net earnings do not include their additional income through benefits, meaning that a typical family earning around £15,400 per annum would, depending on their exact circumstances, have a total household income of between £24,000 and £32,000 once benefits are taken into account. It is estimated that, under this proposal, around 8,000 more children would take up the entitlement by the time Universal Credit is fully rolled out, compared to the number receiving the entitlement at present.

The entitlement lasts for three terms and, once it has commenced, pupils continue to benefit from it until they become eligible for the universal three- and four-year-old free entitlement, even if their family circumstances change. Two-year-olds, therefore, do not lose their entitlement once they have taken it up and no pupil who has started their entitlement would lose it as a result of the introduction of the new earnings threshold.


What does this mean for schools?

Due to the changes that will occur when Universal Credit is rolled out, the numbers of two-year-olds eligible for free early years entitlement will drastically increase. This will mean that early years providers will need to prepare for the increase in pupils, as it may cause a need to acquire additional resources and staff


What’s next?

The consultation is aimed at parents, carers, early years providers and LAs, and seeks feedback from them. Read the full consultation document and register your views on the proposals here – the consultation closes on 15 January 2018.



DfE (2017) ‘Eligibility for the free early years entitlement for two-year-olds under Universal Credit’