The Chancellor announced 30 hours of free childcare for all under-5s from the moment maternity care ends, where eligible.
Jeremy Hunt 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. It’s a package worth on average £6,500 every year for a family with a two-year-old child using 35 hours of childcare every week and reduces their childcare costs by nearly 60%. Because it is such a large reform, we will introduce it 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.
“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. And from September 2025 every single working parent of under 5s will have access to 30 hours free childcare per week.”
Institute for Fiscal Studies (IFS) director Paul Johnson tweeted: “Extending free childcare to all children over 9 months really is a big extension of the welfare state.
“(Probably) about doubles childcare spending.
“We’ve been edging in this direction for a good 20 years. This is a new leg of the welfare state finally nearing its end point.”
But who will benefit from the £4 billion move?
Currently, all three and four-year-olds are entitled to a free part-time nursery education place for 15 hours a week, 38 weeks a year. They qualify for 30 hours of free childcare if both parents earn the equivalent of at least 16 hours a week at the national living wage which means the vast majority of working families qualify although the very richest (those making more than £100,000 are not eligible).
The new plan will provide 30 hours a week to parents of one- and two-year olds, and increase funding by £288m by 2024-25 for the existing programme of free childcare for three-year-olds.
The government will give local authorities funding to start setting up wraparound childcare provision in schools, starting in September 2024, as it tries to match Labour’s pledge to come up with a bold offer on childcare ahead of the next election.
Mr Hunt is planning to increase the hourly rate paid to childcare providers by the government to deliver its existing 30-hour weekly entitlement.
As part of the package of measures, Mr Hunt has brought in changes to the staff-to-child ratios for two-year-olds in childcare.
At present, each carer can only look after four children but that is set to rise to five – in line with Scotland – in an attempt to make childcare cheaper.
When does it start?
The offer of free care for working parents will be available to those with two-year-olds from April 2024, covering around half-a-million parents, but initially limited to 15 hours.
From September 2024 the 15-hour offer will be extended to children from nine months, helping a total of nearly a million parents.
The full 30-hour offer to all under-5s will come in from September 2025.
The phased policy, which will be fully introduced by September 2025, will be worth up to £6,500 a year for working families.
Childcare costs in the UK are among the highest in the world and the government has been under pressure, including from some of its own MPs, to provide more help for parents.
Parents are already marking how much money the new childcare plans could save their households.
A mother of a 16-month-old has called the government's expected announcement to extend funded childcare for one and two-year-olds “almost life-changing” for her family.
Nora Parr, a part-time academic based in Hornsey, north London, said she and her partner currently pay £1,040 a month for four half-days of nursery a week for their daughter.
“The news is exhilarating,” she said.
“We could apply for a mortgage, I could work more... (I) pick up the baby after lunch and finish work during her nap, every minute of childcare is spent on working hours.
“I could have five minutes to myself!
“The nursery is brilliant, but it takes a big chunk of our budget. The change to our finances would be almost life-changing... It would save us 1000+ a month.”