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Childcare: Finance

Answer

In the Spring Budget 2023, my right hon. Friend, the Chancellor of the Exchequer, announced transformative reforms to childcare for parents, children and the economy. By 2027/28, the government will expect to be spending in excess of £8 billion every year on free hours and early education, helping working families with their childcare costs. This represents the single biggest investment in childcare in England ever.

In future, working parents will be able to access 30 hours of free childcare a week for 38 weeks a year from the point their child is 9 months, to when their child starts school. This offer will be rolled out in phases from April 2024 to September 2025. The department is ensuring a phased implementation of the expansion to the 30 hours offer to allow the market to develop the necessary capacity, and we are working closely with the sector on the implementation of these reforms.

We also announced that we will substantially uplift the hourly rate paid to local authorities to increase hourly rates paid to childcare providers, to deliver existing free entitlements offers. The department will provide £204 million of additional funding in 2023/24, paid from September 2023, rising to £288 million by 2024/25.

This will include an average of 30% increase in the 2-year-old rate from September 2023, and means that the average hourly rate for 2-year-olds will rise from the current £6 per hour in 2023/24 to around £8 per hour.

The reforms announced build on our current early education entitlements that the government offers, which includes a universal 15-hour offer for all 3 and 4-year-olds, regardless of family circumstances, the existing 30 hours offer for 3 and 4-year-olds, and a 15 hour offer for disadvantaged 2-year-olds. This includes low-income households and parents on certain benefits, as well as looked after children and children with Education, Health and Care (EHC) plans.

In addition to the entitlements, Tax-Free Childcare continues to be available to eligible parents. Tax-Free Childcare is available to parents who meet the same income criteria as the 30 hours offer and can be worth up to £2,000 per year for children aged 0-11, or up to £4,000 per year for disabled children aged 0-16.

As part of the government’s biggest ever expansion to childcare provision, low-income families will be able to access increased childcare support worth a total of £900 million from 28 June 2023.

Later this month, the Department for Work and Pensions will raise the amount that parents in Great Britain can claim back monthly for their childcare costs on Universal Credit, up to £951 for one child and £1,630 for two or more children. This is a rise of 47% from the previous limits of £646 for one child or £1,108 for two or more children.

At the same time, the government will help eligible parents to cover the costs of the first month of childcare when they enter work or significantly increase their hours, removing one of the most significant barriers to parents working and helping to grow the economy.

Those parents will also receive up to 85% of their childcare costs back before their next month’s bills are due. This means they should have money to pay for childcare one month in advance going forward.

Secondary information

Type

Written question

Reference

186041

Session

2022-23

Related items

Spring Budget 2023
Wednesday, 15 March 2023
House of Commons papers
House of Lords
House of Commons

Transferred

Yes

Subjects

Childcare Finance

Link

View this Written question on www.parliament.uk