Chancellor of the Exchequer announces new childcare reforms

Today (15 March), Chancellor of the Exchequer, Jeremy Hunt, announced new reforms for childcare in the 2023 budget. 

Hunt, who prepares the UK’s annual budgets, spoke in the House of Commons at 12.30pm. The final point of his four E’s (Everywhere, Enterprise, Employment, Education) about education focused on how childcare would be reformed to help parents. 

He announced that the government would be extending the current childcare system, which currently provides 30 hours of free childcare per week to three and four-year-olds. This will be extended to cover all children aged 9 months and over. 

Hunt stated that the expansion will apply to households in England where both parents work. He said that because the reform is so big, it will be introduced in stages to ensure there is enough supply in the market. 

The stages were announced in order: 

–  April 2024: Eligible 2-year-olds will get 15 hours of free childcare per week 

– September 2024: Qualifying children aged between nine months and two years will get 15 hours of free childcare per week 

– September 2025: Eligible children aged between nine months and three years will get 30 hours of free childcare per week 

Mark Russell, chief executive at charity The Children’s Society, responding to the budget, said: “The childcare system isn’t currently working well for parents so we’re pleased to see the expansion of free hours and removal of upfront costs that will help many balance work and children, but the announcements today will not solve the urgent financial stress families are experiencing now.  

“Families are living with financial hardship every day – from struggling on a low income to trying to navigate unexpected financial shocks, such as a boiler breaking down or losing a job. We see colossal levels of demand for crisis support because of the cost-of-living squeeze.  

“We need a permanent commitment from the government to fund Local Welfare Assistance through the Household Support Fund, as well as more measures to cut costs for parents including extending free school meals to all children whose families are on Universal Credit, and investment in social security so all families can afford the essentials. 

“Teenagers are still children too, and direct support for them has been decimated at the same time as we’ve seen their mental health and wellbeing plunge to record lows and the complexity of risks they face grow. 

“We desperately need investment into early intervention support for young people delivered through social care and early support hubs in local communities and mental health support teams in all schools so that problems don’t spiral into crisis.”  

In addition to today’s plan for free childcare being introduced to working parents of infants, Hunt also announced that the hourly rate paid to childcare providers who deliver free hours care will increase. 

Each staff member in England will also be able to look after five two-year-olds instead of four, which is already the case in Scotland. 

Hunt said that the government would work with local authorities to ensure all schools in England will be able to offer wraparound care between 8am and 6pm by September 2026. He also stated that there will be a £600 incentive payment for people who sign up to be childminders. Those who sign up through an agency will receive £1,200. 

James Bowen, director of policy for school and nursery leaders’ union NAHT, said: “NAHT has been calling for an increase to hourly funding rates for some time. Today we have seen the detail in the budget and whilst any additional funding is welcome, given the current challenges settings are facing, frankly the money announced today is a fraction of what is needed. 

“Our members are also questioning where they will find the additional staff needed for an extension of the current childcare offer. There is a real danger that this could backfire for the government if it is not properly funded.” 

Paul Whiteman, general secretary of school leaders’ union NAHT, added: “It is bitterly disappointing that the chancellor has squandered the opportunity to support schools in today’s budget. 

“We are in the middle of one of the most serious recruitment and retention crises we have seen for decades, and we have a school estate that is literally crumbling in places.  

“Rather than addressing those obvious and pressing priorities, the government has chosen to focus on what appears to be a half-baked scheme to extend wraparound care in schools that won’t take effect for another three years. 

“Once again, we are left with the feeling that this government is detached from the reality of what is actually going on in our schools.” 

Other points Hunt announced is that families on universal credit will get childcare support upfront, instead of having to claim it back. 

The current childcare cap which people on universal credit can claim will also increase. The current cap of £646 for one child will increase to £950. The cap for two children will increase from £1,108 to £1,630.