Budget 2023: Hunt announces expansion of funded childcare hours

Announcing his Budget for 2023, Hunt said that the current system in England, which offers 30 hours of funded childcare to parents of three- and four-year-olds who work the equivalent of 16 hours per week on National Minimum Wage, will be expanded to cover the lower age group.

The reforms, which will match the eligibility of the current three- and four-year-old offer, will be introduced in stages with all parents of children under five able to access 30 hours of funded childcare from September 2025, Hunt said.

• Schools to extend reach through more places for two-year-olds

• The continuing saga of the childcare cost

Fifteen hours of free childcare for working parents of two-year-olds will be introduced in April 2024 and 15 hours of free childcare for working parents of children aged nine months to 3 years old will be introduced in September 2024.

Currently, children aged three and four, whose parents earn below the 16 hours per week threshold, are entitled to 15 hours per week while disadvantaged two-year-olds can receive 15 hours of funded childcare if their family receive certain benefits.

So delighted that so many families will benefit from our expanded childcare offer, which is a hugely important part of their daily lives.

I have met so many brilliant nurseries and childminders in this role and I’m glad they are seeing an uplift in funding as well. https://t.co/LokEp07Tcr

— Claire Coutinho MP (@ClaireCoutinho) March 15, 2023

Hunt has also announced an increase in childcare allowances for parents on universal credit, which will be paid up front rather than in arrears, of £951 for one child and £1,630 for two children – an increase of around 50 per cent compared with current rates.

As part of a package of measures for early years, the hourly rate paid to childcare providers by the government will be increased by £204 million from this September rising to £288 million next year.

Local authorities will be given funding to start setting up wraparound childcare provision in schools between 8am and 6pm from September 2024.

Hunt has also committed to controversial plans to reduce staffing ratios for early years settings in England from 1:4 to 1:5 to align with Scotland.

Incentive payments of £600 for new childminders will be piloted from autumn of this year.

The payment will increase to £1,200 for those who join through an agency “to increase the number available and increase choice and affordability for parents”, the Chancellor said.

Among other announcements designed to support families struggling with the cost-of-living crisis, Hunt confirmed that the government's energy price guarantee will remain at £2,500 for the next three months.

This is "ahead of an expected fall in prices from July", he told MPs.

The Chancellor pledged £100m to support "thousands" of local charities and community organisations working to support vulnerable families as well as a £63m fund "to keep public leisure centres and pools afloat".

Meanwhile, the care relief threshold, which reduces tax for foster carers will be doubled, Hunt added, while looked-after children and those with SEND will receive greater support to enter paid work.