The government will extend its free childcare programme to all children between the ages of nine months and five years in England, in a bid to help grow the UK workforce and economy.
The announcement came as part of today's Spring Budget at a time when childcare costs in the UK are among the highest in the world.
The cost of childcare in the UK is widely seen as a factor that stops parents, most often women, from returning to the workforce after having a child.
Acknowledging this, chancellor Jeremy Hunt said: “Almost half of non-working mothers say they would prefer to work if they could arrange suitable childcare.
"For many women, a career break becomes a career end. Our female participation rate is higher than average for OECD economies, but we trail top performers like Denmark and the Netherlands.
"If we matched Dutch levels of participation, there would be more than one million more women who want to work, in the labour force," Hunt said.
Currently 30 hours of free childcare is given to all three- and four-year-olds in England.
This will be extended to all children between the ages of nine months and five years by September 2025.
According to Hunt the extension will be worth around £6,500 pounds every year for parents with a two-year-old child, reducing childcare costs by nearly 60 per cent.
The programme will be introduced on a phased basis to ensure enough supply in the market.
Roll out
- From April 2024, working parents of two year-olds will be able to access 15 hours of free childcare per week.
- This will be extended to working parents of nine-month to two-year-olds from September 2024.
- From September 2025, all eligible working parents of children aged nine months up to three years will be able to access 30 free hours per week.
Last year, two-thirds of childcare providers increased fees.
To help tackle this, Hunt said the government will be increasing funding paid to nurseries providing free childcare by £204mn from this September, rising to £288mn next year.
In addition to this, the government will increase child to carer ratios in England from 1:4 to 1:5, however Hunt said this will remain optional for nurseries.
Interactive Investor senior personal finance analyst Myron Jobson described the announcement as “a game changer”.
“Many parents with fledging careers have had their wings clipped because the eye-watering cost of childcare has made full-time employment uneconomical - a fate that is statistically experienced by mothers most, which is frankly unacceptable.
"The measure could also prove to be an important step forward towards addressing the gender pay and pension gap.
“Interactive Investor estimates that the gender pension gap alone is £68,000. The plan will go a long way in easing the financial burden of raising children at a time when many parents are desperate for a financial reprieve amid the cost-of-living crisis.”
Elsewhere, Hunt said he also wants to extend childcare support for school age children.
“Our ambition is all schools will offer a wrap around offer by September 2026,” Hunt said.
This would mean all schools will need to offer drop-off and collection between the hours of 8am and 6pm.
Currently, only 64 per cent of primary schools are offering childcare at both ends of the school day.
The announcement comes on the same day as a two-day strike by teachers and support staff in England begins over pay and funding.
So far the National Education Union and the Department for Education remain at odds, with the department saying they will negotiate with the union only if they call off the strikes.
jane.matthews@ft.com
