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Budget 2023: Jeremy Hunt announces multibillion expansion of free childcare

Jeremy Hunt has promised a major expansion in state-funded childcare in Budget measures aimed at boosting economic growth.

He promised up to 30 hours a week of free childcare for eligible households in England with children as young as nine months, instead of three and four-year-olds under the current policy.

The phased plan aimed at removing barriers to work, which will be fully introduced by September 2025, will be worth up to £6,500 a year for working families.

He also pledged an expansion in wrap-around care at the start and finish of the school day for parents with older children and changes to staff-to-child ratios in England to expand supply of childcare.

Mr Hunt said: ‘We have one of the most expensive systems in the world. Almost half of non-working mothers said they would prefer to work if they could arrange suitable childcare.

‘For many women, a career break becomes a career end. Our female participation rate is higher than average for OECD economies, but we trail top performers like Denmark and the Netherlands. If we matched Dutch levels of participation, there would be more than one million more women who want to work, in the labour force. And we can.’

He told the Commons : “I today announce that in eligible households where all adults are working at least 16 hours, we will introduce 30 hours of free childcare not just for three- and four-year-olds, but for every single child over the age of nine months.”

“The 30 hours offer will now start from the moment maternity or paternity leave ends,” Mr Hunt continued.

He said the package would be worth on average £6,500 every year for a family with a two-year-old child using 35 hours of childcare every week, reducing their childcare costs by nearly 60 per cent.

Mr Hunt said the reforms were so larged that they would have to be introduced in stages to ensure there is enough supply in the market.

“Working parents of two-year-olds will be able to access 15 hours of free care from April 2024, helping around half a million parents,” he said.

“From September 2024, that 15 hours will be extended to all children from 9 months up, meaning a total of nearly one million parents will be eligible.

 (PA)
(PA)

“And from September 2025 every single working parent of under 5s will have access to 30 hours free childcare per week.”

Mr Hunt said Rishi Sunak’s government will increase funding paid to nurseries providing free childcare under the hours offer by £204m from this September and rising to £288m next year.

The chancellor said he also wants to help 700,000 parents on Universal Credit who had limited requirements to look for work.

“Many remain out of work because they cannot afford the upfront payment necessary to access subsidised childcare,” he explained. “So for any parents who are moving into work or want to increase their hours, we will pay their childcare costs upfront.

Chancellor Jeremy Hunt has delivered his ‘Budget for growth’ (PA Wire)
Chancellor Jeremy Hunt has delivered his ‘Budget for growth’ (PA Wire)

“And we will increase the maximum they can claim to £951 for one child and £1,630 for two children, an increase of almost 50%.”

The Treasury previously announced plans to increase the £646-a-month cap on support for parents on universal credit by several hundred pounds, and pay the support up front instead of parents having to claim it back.

But Neil Leitch, chief executive of the Early Years Alliance told Radio 4 that the expansion plan could “spell disaster” by forcing more nurseries that could not afford to provide more hours out of business.

Labour MP Stella Creasy said the expansion of free childcare was “economically illiterate”, warning there would not be enough capacity from providers to provide the promised hours.

Labour’s Alison McGovern said proper reform was needed (PA Archive)
Labour’s Alison McGovern said proper reform was needed (PA Archive)

The chancellor has come under pressure in recent weeks to act on childcare – among the most expensive in the world – to rival Labour’s offer of a radical overhaul ahead after the next general election. Labour has promised complete reform of the system, labelling it “broken”.

The CBI has estimated that expanding 30 hours worth of provision to the parents of 1 and 2-year-olds – and boosting funding that reflects the true cost of provision – would cost £8.9bn.

Currently all families of three and four-years-old qualify for 15 hours of free childcare a week, over 38 weeks. Households can qualify for 30 hours of free childcare a week if parents earn the equivalent of 16 hours a week at the national minimum or living wage.

Alison McGovern, Labour’s shadow employment minister, previously said any announcement needed to be part of a “proper reform strategy”.

She told BBC Newsnight on Tuesday evening: “If we spend Budget Day tomorrow talking about childcare I’ll think that’s a good thing … We need proper reform. This has got to be part of a proper reform strategy because we know that the system’s not working at the moment.”