It will be available for 38 weeks of the year (term time) from September 2025, with a phased introduction starting in April 2024.

A number of other changes were also confirmed, including:

• The way households receiving Universal Credit receive childcare support
• An increase in the Government money childcare providers receive
• Grants of £600 for new childcare workers
• Relaxation of the child to staff ratios for two-year olds.

Today’s changes are being introduced in a bid to help UK parents who pay the highest childcare fees of any developed nation, according to the OECD. Meanwhile, three-quarters of mothers say it makes no financial sense to work because of the high cost of childcare.

Yet at the same time providers are struggling financially with many closing because of rising costs.

Extending the 30 free childcare hours

From April 2024, all eligible parents of two-year olds will be able to access 15 free weekly term time childcare hours. This will be extended to all parents with children aged nine months or older from September 2024. 

Sponsored

Wellness and wellbeing holidays: Travel insurance is essential for your peace of mind

Out of the pandemic lockdowns, there’s a greater emphasis on wellbeing and wellness, with

Sponsored by Post Office

From September 2025, all parents with children aged nine months and older will be able to access 30 free hours of childcare a week.  

The Government said the eligibility for the free hours for children aged nine months and older will match the existing offer for three- and four-year olds. This means any parent or carer who works at least 16 hours a week but earns under £100,000 will be able to benefit.

At the moment children start being able to access the free hours in the term after their third birthday, so there can be a lag between when they are eligible and when parents actually gain the financial help. There are no details yet about whether this will be the same when the free hours are extended for younger children.

Additional funding for providers was also confirmed by the Chancellor, of £204m in 2023/24, increasing to £288m in 2024/25. This money will be for providers to pay for the current free hours for three- and four-year olds.

It also said it will provide over £4.1bn by 2027/28 to fund the extension of the system to younger children.

Expansion without investment is a ‘recipe for disaster’

Campaigners have pointed out that this money will not meet the current financial shortfall between the Government’s free hours and the money providers receive.

Neil Leitch, chief executive officer of the Early Years Alliance, said that the shortfall for the current system for three- and four-years olds is around £1.8bn and that the £204m announced by the Government today will barely touch the sides of this gap.  

He said: “We know from bitter experience that expansions of so-called ‘free childcare’ without adequate investment are a recipe for utter disaster – and given that many providers rely on fees from younger children to make up for current funding shortfalls, the impact on the sector if the Government gets this wrong cannot be underestimated.

“And while today’s announcement will no doubt be effective at driving up the demand for early years places, it’s far less clear how ministers intend to ensure adequate supply. 

“At a time when settings are closing at record levels and early educators are leaving the sector in their droves, unless the proper infrastructure is put in place by the time the extended offers are rolled out, many parents of younger children expecting funded places to be readily available to them are likely to be left sorely disappointed – and the token offer to new childminders announced today is likely to do little to change this.”

‘Biggest benefit for parents of children not even conceived yet’

Laura Suter, head of personal finance at AJ Bell, said: “The devil in the detail is that the support will be staggered, with the full scheme not brought in for another two and a half years, meaning that many parents of toddlers today will miss out and the biggest benefit will be for parents of children not even conceived yet.

“What’s also key is that the Government is increasing what it pays nurseries for these free hours. Until now the ‘free’ hours have been anything but, with the government paying such a low sum for the hours that most nurseries are forced to construct a patchwork of charges for parents to make up the shortfall.

“The Government says it will allocate another £204m from September this year to boost the amount paid to nurseries – although it’s unclear if this is sufficient to bridge the entire funding shortfall or if parents will still have to top up.”

Relaxing ratios of children to staff

Minimum ratios, which are currently set at four children to one staff member, will be increased to five children to one staff members in England, mirroring the system in Scotland, it was also confirmed today.

The controversial move was first suggested in 2013 by Liz Truss and it has been widely criticised by providers and campaigners.

The change will be introduced for two-year old children from September this year, subject to parliamentary approval. Hunt added the new ratios will remain optional with no obligation on either childminders or parents to adopt them.

Neil Leitch added: “It is utterly appalling that the Government has pushed ahead with this decision, and the fact that it has done so without even bothering to respond to the official consultation launched several months ago is an insult to the sector and an insult to families.

“Yes, parents want affordable care and education, but they also want to ensure that their children are in safe environments receiving quality care and education – something this policy completely flies in the face of.

“In their focus on growth and boosting the economy, ministers have forgotten that we have a responsibility to our youngest children: to ensure that they all, without exception, get the best possible start in life. It is a shameful decision, and one we will continue to fight to oppose.”

Universal Credit claimants to get childcare costs paid upfront

Changes to the way in which UK families who claim Universal Credit pay for childcare costs were also confirmed in the Budget today.

Parents eligible for Universal Credit will now be given childcare payments upfront rather than in arrears. 

Many parents on low incomes are put off going back to work, or working more hours, because of how the current system works. 

Households receiving Universal Credit can claim back 85% of their childcare costs up to a maximum amount. This maximum monthly amount will also increase from £646 to £951 for one child and from £1,108 to £1,630 for two children.  

The Government also announced it would provide £600 start-up grants for those starting work in childcare.

To help parents of school-age children, the Chancellor said the Government is launching a wraparound childcare pathfinder scheme. This will work towards the aim of all primary-aged children being given the option of wraparound care from 8am to 6pm in England.

There will be funding worth £289m given to schools and local authorities to test options to increase the availability of wraparound childcare.