The government scheme aimed at improving recruitment and retention of staff in early years settings has failed to attract the anticipated number of applicants.

Early Years Financial Incentives offered a £1,000 post-tax and national insurance bonus to eligible new and returning early years workers shortly after they had taken up their role.

The Department for Education says the scheme was delivered at a cost of £2.7 million, with 512 incentives administered. Despite this, the report on the pilot scheme finds “no measurable increase” in the number of applicants per vacancy or in the speed of processing of applications.

Early years recruitment difficulties

There was a “misalignment” between the pilot scheme’s aims and the needs of providers, the report says.

Its data shows that most new recruits were not aware of the financial incentive when they applied for a role and most said the incentive did not influence their decision to apply.

Early years providers said financial incentives did not address the “underlying causes” of persistent vacancies, including “low interest” in the sector and a lack of qualified candidates.

The project was targeted at individuals new to the early years sector, but providers said it was more “economically viable” to hire a smaller number of qualified staff who could care for more children.

Providers indicated a preference for this approach over “investing time and resources in mentoring new, unqualified recruits”. According to the report, early years providers said this process was “resource-intensive” but offered “limited short-term return on their investment”.

Lack of suitable candidates

The scheme did increase applications for vacancies for some providers, but jobs “consistently” remained open “for months” due to a lack of suitable candidates.

The report says applicants often did not have the necessary qualifications for the positions they were applying for, and that soft skills and a general interest in the work were lacking.

According to providers, the £1,000 incentives failed to address the underlying causes of longstanding vacancies and most said the application pool was “inadequate in terms of candidate quality, experience and motivation”.

The pilot was conducted in 40 local authorities with high levels of deprivation and that struggled to attract early years staff. The authorities were placed into control and treatment groups as part of a randomised controlled trial, to see if paying incentives could help to improve recruitment.

Positive for apprentices

The report says the scheme was successful in recruiting apprentices to the sector, as the payment was “particularly attractive” to younger applicants.

Some local authorities said the financial incentive helped retention of apprentices “who might have otherwise left the sector” and of those returning to early years work.

Data from the applicants’ survey indicates that most respondents who received the £1,000 payment would be less likely to leave the sector within the next year than those who did not receive the payment, although the DfE acknowledges that this finding is based on a small sample size.

The pilot scheme was launched in January 2024 and concluded in March 2025. A further rollout of financial incentives started in July 2025.

In 2024 the DfE launched the largest ever expansion of government-funded childcare, amounting to £4 billion of additional investment. The department estimated that 35,000 additional workers were required to meet the anticipated increase in demand for childcare places.

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