MILLIONS more parents will now get 30 hours of free childcare in today’s Budget in a huge new change.
Jeremy Hunt will extend help for working mums and dads in a bid to get more Brits back to the office and to boost the economy.
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The parents of anyone over nine months will get 30 hours of free childcare a week in future – for the first time ever – as long as both parents are working 16 hours a week.
The huge change is among at least seven changes revealed in the Budget today.
Those looking after three-year-olds will get extra help too.
The Chancellor says it will be worth £6,000 every year for a family with a two-year-old child.
Mr Hunt said: “We have the one of the most expensive systems in the world. Almost half of non-working mothers said 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. And we can.”
Working parents of two-year-olds will be able to access 15 hours of free childcare from next April, in 2024.
And that will be extended to all children from nine months old after September 2024.
One million more parents will be eligible for help.
By September 2025, “every single working parent of under fives will have access to 30 hours free childcare per week”, Mr Hunt told MPs.
The Chancellor also hiked the hourly rate paid by the Government to childcare providers, who have long said that the help they get doesn’t actually cover their costs.
Mr Hunt said: “We will increase the funding paid to nurseries providing free childcare under the hours offer by £204m from this September rising to £288m next year.
“This is an average of a 30 per cent increase in the two-year-old rate this year, just as the sector has requested.”
Childminders will get a £600 bonus if they sign up to become one, and another £1,200 for those who join an agency, in an attempt to get more into the system.
Another £400 million is also being dished out to local councils for breakfast and after-school clubs to encourage people to stay in work too.
The policy is set to cost a whopping £4 billion – and the Treasury had initially thought it would be too expensive to announce at today’s statement.
The system will replicate the means-testing of the existing childcare offer for three and four-year-olds – meaning that higher earners won’t be able to access it in full.
At the moment all parents of three and four-year-olds get at least 15 hours a week of free help – no matter how much parents earn.
And they can get 30 hours of free childcare if both parents earn at least 16 hours a week on the minimum wage – up to a total of £100,000.
The Chancellor has admitted that the huge costs of childcare are stopping parents from taking up work.
Ministers want to cut the number of people who are economically inactive – out of work and on benefits or retired.
He is planning a series of “skills bootcamps” to tempt retirees back into work.
There will also be an expansion to the “mid-life MOT” scheme where people are offered financial advice to see whether they can actually afford to retire early.
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Help with childcare costs
There is a range of tax breaks and grants to help make childcare more affordable.
You can usually use them for care like registered childminders, nannies, playschemes, nurseries, and holiday clubs.
It’s worth checking the government’s handy childcare costs calculator to find out which scheme will save you the most money, as not all of them can be used at the same time.
Tax-free childcare
You can get up to £500 every three months – up to a maximum of £2,000 a year – for each of your children to help with the costs of childcare.
If your child is disabled, it’s even more – £1,000 every three months, up to £4,000 per year.
To receive the tax-free benefit you need to create an online childcare account.
For every £8 you pay into this account, the government will add £2 which you can use to pay your approved provider.
You should bear in mind that you can’t claim tax-free childcare if you receive working tax credit, child tax credit, Universal Credit, or childcare vouchers.
Your tax credits will stop immediately if you successfully apply for tax-free childcare. You will also have to cancel your Universal Credit and childcare vouchers.
Use the government’s calculator tool to work out which option will work best for you.
Universal Credit childcare costs
You can claim back 85% of childcare costs up to £646 for one child or £1,108 for two or more up to August 31 following the child’s 16th birthday.
You will have to pay your childcare costs yourself up front and then claim the money back through Universal Credit – here’s the government’s guide on how to do that.
15 or 30 hours free childcare
All three to four-year-old children in England are entitled to 15 hours of free childcare – amounting to 570 hours per year – from the term after their 3rd birthday.
The free allowance is usually taken as 15 hours per week for 38 weeks of the year, but it is possible to take it at a time that suits you.
The free early education and childcare must be with an approved childcare provider and stops when your child starts school.
Working parents may be eligible to get up to 30 hours of free childcare if they are working at least 16 hours a week on average and earning the National Minimum Wage or more.
Check out what you could get and apply online at gov.uk.
Free childcare for 2-year-olds
Parents living in England and claiming certain benefits can access some free childcare for their two-year-olds, including:
- Income Support
- income-based Jobseeker’s Allowance (JSA)
- income-related Employment and Support Allowance (ESA)
- Universal Credit, and your household income is £15,400 a year or less after tax, not including benefit payments
- tax credits, and your household income is £16,190 a year or less before tax
- the guaranteed element of Pension Credit
- the Working Tax Credit 4-week run on (the payment you get when you stop qualifying for Working Tax Credit)
