The Chancellor announced the extension of free childcare places to children under three years old in England to match the 15 or 30 hours of free childcare currently provided to three and four year olds in term time.
The extra funding will only apply in England and will be rolled-out in stages.
From April 2024 parents of two-year-olds will be able to access 15 hours of free childcare per week.
From September 2024 parents of children aged nine months up to three years old will be able to access 15 hours of free childcare per week.
From September 2025 parents of children aged nine months up to three years old will be able to access 30 hours of free childcare per week.
To qualify for 30 hours of free childcare under the current scheme the parents must be working and each earning at least £659 per month. Where the adjusted net income of one or both parents is above £100,000 this is reduced to 15 hours. It is not clear yet whether these limits will remain in place under the new scheme.
The practical barrier to providing these free childcare places is the availability of space in nurseries. To tackle that the Government will allow childcare providers to change the ratio of staff to children from 1:4 to 1:5 for two-year olds. It is also providing all newly registered childminders with a start-up grant of £600 and those who register with a childminder agency will receive a grant of £1,200.
The payment made by the Government to nurseries to provide these free places will be increased by around 30%. Currently the amount paid per hour of care is well below the actual cost of providing care, so the free places have to be cross-subsidised by charging other parents more.