Children from disadvantaged families in England are missing out on early years education because their parents are not in work or do not earn enough, contributing to a widening gap between the poorest children and their peers before they even start school, according to a new report.

A study by the Sutton Trust and the Sylvia Adams Charitable Trust said the government’s policy of funding only 15 hours of weekly childcare or nursery for three- and four-year-olds from low-income families, compared with 30 hours a week for children whose parents were in work, was compounding inequalities and harming children’s life chances.

The report found that 70% of families eligible for the full 30 hours were in the top half of earners, while just 13% of eligible families were in the bottom third of income distribution. That could be overcome by funding universal access for 30 hours a week, at a cost of about GBP250m a year, the report estimates.

Jane Young, director of the Sylvia Adams Charitable Trust, said the report showed that the most disadvantaged children in England were being excluded from the same access to early education as their more advantaged peers.

“We cannot allow this situation to continue. The problem is clear and the negative outcomes stark, but this report offers workable solutions. This is not a report to put on a shelf to gather dust – it must be acted upon if we are to give all our children a fair start,” Young said.

All children in England aged three and four are entitled to funding for 15 hours of provision each week. Since 2017, children whose parents are working and earning at least the national minimum wage or living wage are entitled to the additional 15 hours a week.

The current policy most directly affects the 16% of children in families where no parents are in work. While children from the most disadvantaged families are entitled to 15 hours of childcare provision from the age of two, researchers found that in some cases those places were withdrawn to prioritise 30-hour places for children of working parents, especially during the pandemic.

The report includes modelling by the Institute for Fiscal Studies that suggests universal provision of 30 hours a week would see the proportion of children from the poorer households increase to match those from wealthier families.

June O’Sullivan, chief executive of the London Early Years Foundation, which runs 39 nurseries across London, said it was scandalous that disadvantaged children did not receive the same funding. “Many families have been so very badly let down by consecutive governments that have all talked about the importance of the early years and access to high-quality affordable childcare, yet no one is prepared to fund it properly,” O’Sullivan said.