Free childcare in Budget 2023: Jeremy Hunt announcement explained - who is eligible for expanded hours?

Jeremy Hunt has announced an extension to free childcare hours for parents in his Spring Budget.

The Chancellor of the Exchequer has expanded the 30 free hours scheme to parents of children under the age of five - although it will take a year for the scheme to begin and two years for it to be fully scaled up. The government has also announced extra funding in a bid to boost the coverage of childcare across England, but industry organisations have already said the amount announced by Hunt will not fix a system the Labour Party has described as “broken”.

Recent research showed coverage in England for children under two-years-old has dropped from 57% to 50% over the last year. At the same time, the price of childcare has soared for parents who are already being hit by the cost of living crisis.

The reforms announced in the Spring Budget were part of a government bid to get more people back into the workforce - an outcome that it is believed would grow the UK economy. Hunt also targeted getting over-50s back onto the payroll by making pension rules more generous.

It comes as the country continues to flirt with the prospect of a recession in 2023. Although continued economic growth has so far confounded expectations, several major institutions are still forecasting a downturn.

So, what did Jeremy Hunt announce about childcare - and what has the industry said about the changes?

30 hours free childcare to expand

Jeremy Hunt has announced the government will expand the 30 hours per week of free childcare some parents can already access to all children between the ages of nine months old and five. Hunt said it should cut annual parenting costs by 60% a year.

It means parents coming out of maternity or paternity leave in England will now be eligible for free childcare, and will be able to continue to access it for more than four years. It is the biggest change to the system since David Cameron introduced the 30 hours scheme in 2015 and comes after the CBI urged the government to bolster its childcare offering to help the UK combat its job market vacancies crisis.

At present, all families with three- and four-year-olds can receive 15 hours of free childcare a week for 38 weeks per year. Households can qualify for 30 hours of free childcare a week if parents earn the equivalent of the national minimum or living wage for 16 hours a week. The expanded scheme will apply to parents meeting this wage criteria.

However, the rub for parents will be that this policy announcement will not kick in for another 12 months, and will then be phased in over another 12-month period. From next April, working parents of two-year-olds will get 15 hours of free care. From September 2024, this will extend to children aged nine months or older, and then from September 2025, the full scheme will kick in.

Extra money for childcare providers

While the provision of childcare has been expanded, Hunt also acknowledged providers will need extra funding to deliver it.

He said he would provide £204 million to nurseries providing free childcare, rising to £280 million next year. The Chancellor also said he would introduce golden handshakes to get more people into childminding, offering £600 to £1,200 incentives to do so.

Meanwhile, minimum staffing requirements of one childminder to every four children would be relaxed to one member of staff for every five kids. For older school-age children, ‘wraparound’ care proposals will mean schools across the country will be given extra money to offer services from 8am in the morning until 6pm in the evening.

However, the extra money and incentives have been heavily criticised by Neil Leitch, CEO of the Early Years Alliance, who said the announcement would increase demand without ensuring “adequate supply”. Mr Leitch said: "With the shortfall for current two-, three- and four-year-old offer estimated at around £1.8 billion based on government's own figures, the additional funding announced today is highly unlikely to match what's needed to put providers on a steady footing, and raises serious questions about the government's entire approach to costing this policy.

"We know from bitter experience that expansions of so-called 'free childcare' without adequate investment are a recipe from 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. 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.”

James Bowen, director of policy for school and nursery leaders’ union NAHT, was also critical of the Budget announcement. He said: “Whilst any additional funding is welcome given the 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."