Trials will take place in ten areas: Blackpool, Cornwall, Greenwich, Kent, Lambeth, Lancashire, Newcastle, Northamptonshire, Peterborough and Rotherham.
The plans were announced as the Deputy Prime Minister and children's minister Sarah Teather held a childcare summit with representatives from early years organisations and the biggest nursery groups in the country to discuss how best to expand the scheme.
The Government's response to the consultation on proposed changes to the entitlement to free early education and childcare sufficiency sets out plans for the first phase. Alongside it, there is new statutory guidance for local authorities on the delivery of free early education for threeand four-year-olds and securing sufficient childcare, which comes into force on 1 September, and replaces the current Code of Practice.
At 20 pages, it is less than half the length of the previous guidance and it is intended to be less prescriptive. An impact assessment which analyses the pros and cons of revising the guidance has also been published.
The Government also confirmed that funding for the scheme will be allocated to local authorities through the dedicated schools grant from April 2013, which is ring-fenced for spending on education.
Ministers hope that this will reassure nurseries, pre-schools and childminders that if they expand their settings to cater for more two-year-olds the funding will be there.
The DfE also published figures to show how many two-year-olds in each LA will be able to access places from 2013.
Other key changes are:
- Revised statutory guidance to make it clear that parents do not have to pay to access their free place, in light of ongoing concerns that parents are still paying 'top-up' fees
- Parents will be able to access free places over a longer day from 7am to 7pm (instead of 8am to 6pm) to give them more flexibility
- Parents will be able to use their 15 hours over two days a week, replacing the current minimum of five hours over three days. Ministers say that currently many parents are unable to take up all the hours because of this restriction
- Settings graded 'outstanding' or 'good' by Ofsted will be able to provide free places for two-year-olds, and those that are 'satisfactory' will need to meet at least one other criteria from 'a basket' of quality measures. LAs will be able to stipulate that providers meet more than minimum criteria to ensure that children from disadvantaged backgrounds have access to a high quality setting.
Around 150,000 children, 20 per cent of two-year-olds, will be entitled to a free place for 15 hours a week in the first phase of the scheme from September 2013. From September 2014, 260,000, 40 per cent of two-year-olds, will become eligible.
There will be a second consultation later this year on proposed eligibility criteria for the second phase.
Meanwhile, there is growing unease in the early years sector about whether the coalition Government's ambition for more free early education places for two-year-olds is realistic, given the chronic long-term issue of under-funding.
The Pre-School Learning Alliance's survey of more than 1,000 nurseries and pre-schools in England found that only one in eight settings believes they will receive enough funding to cover their costs (see box).
Neil Leitch, chief executive of the Pre-School Learning Alliance, said, 'The real challenge is going to be persuading providers.
'I think there's a limit to what you can do. You can't physically make people invest in capital and unless it's a sound financial investment there is no reason why they should.
'But assuming we can get the funding levels right, I do think there's a sound business case, for example, for a fast-track business loan scheme to encourage providers to invest and expand their nurseries.'
Mr Leitch said he was also concerned about whether the scheme would attract disadvantaged families in sufficient numbers to meet the Government target.
'The National Audit Office report showed low take-up in disadvantaged areas among three-and-four-year-olds - what's to say that won't happen with two-year-old funding?
'Unless it truly is a free entitlement there's a possibility the places are even more vulnerable because they are targeted at the neediest families.'
Ruth Pimentel, chief executive of Toad Hall Nursery group, who also attended the summit, said, 'Toad Hall will be doing all we can to offer places to two-year olds, but they will be limited because our occupancy is already high. The challenges are ensuring the places available are of high enough quality in the right areas for the families.'
She added, 'I think there needs to be excellent communication with families to enable them to understand the benefits of children accessing these places and supporting them as they develop partnerships with parents.'
KEY FINDINGS FROM THE PRE-SCHOOL LEARNING ALLIANCE SURVEY
Does the free entitlement funding for three-and four-year-olds cover
Yes - 38 per cent
No -62 per cent
Do you intend to get involved with the two-year-old entitlement?
Yes - 83 per cent
No - 17 per cent
Would you be prepared to invest capital to increase your capacity for
Yes - 21 per cent
No - 79 per cent
Given your experience of the three-and four-year-old offer, are you
confident that your LA will pay for two-year-olds at a level that will
cover your costs?
Yes - 13 per cent
Maybe - 28 per cent
No - 59 per cent
Do you think that the additional needs of some two-year-olds will cost
you more than you expect to receive from your local authority?
Yes - 66 per cent
Maybe - 30 per cent
No - 4 per cent
Comments from providers
On taking part in the two-year-old offer
I can't afford to. It would be financial suicide for my business, as staff ratios have to be higher.
Difficult to adapt our building, low take-up in our area.
If we can have another room, as our one room cannot serve two-year-olds, plus threeand four-year-olds' needs.
We currently have two 'free' two-year-olds with us and it is really hard work. We have to employ another member of staff to ensure correct ratios.
Does the free entitlement for three-and four-year-olds cover your costs?
Not even close. It's an insult and should not be advertised as free, as it's extremely misleading to parents.
Definitely not, we get £3.74 an hour and are running at a loss.
My costs are £5 an hour per child. I receive £2.98 in funding.
Funding has been frozen for the past few years. Our costs have increased and we now lose more than £2,000 a year on the funding.