Will Jeremy Hunt’s childcare plan really make a difference for parents?

Who is eligible for the free hours and when the changes are being brought in sick leave or maternity/paternity leave) and they must work a minimum of 16 hours a week earning at least the minimum wage. This equates to earnings £1,976 across three months if you’re aged 23 and over.

You also can’t have an ‘adjusted net income’ of £100,000 or more. This generally is your income from salary, investments and dividends minus any pension contributions. This limit is per parent, not for a couple. So, a family with two parents each earning £99,000 would be eligible but a family with one working parent earning £101,000 wouldn’t be eligible.

Jeremy Hunt unveiled a new plan to help parents with childcare costs at the Budget, but lots will be disappointed to miss out as the full scheme won’t be in place until late 2025.

The chancellor said that parents will be able to access 30 hours of free childcare a week, per child, from the time their child is nine months old. Currently parents of three and four year olds get 30 hours free but those with younger children get nothing.

WHEN IS THE SCHEME COMING IN?

The Government is rolling out the scheme gradually, to ensure that the nurseries aren’t inundated with requests for spaces and that there isn’t too much demand and not enough supply. It means that from April next year parents of twoyear-olds will be able to claim 15 free hours a week. From September next year those with children nine-months-old to two-years-old will get their 15 free hours and then from September 2025 everyone with a child nine months and older will get the full 30 free hours (until they reach school age).

Who Is Eligible

There are some caveats as to who can claim the money. Both parents have to be working (or on

SO ARE THE CHANGES POSITIVE?

There is a lot of debate on this at the moment. Parents of toddlers now are frustrated that the system isn’t coming in sooner, meaning many will miss out. It will actually be most beneficial for children who haven’t even been conceived yet.

There is also some concern about how nurseries will deal with the changes. Currently the Government pays nurseries far less than the going rate for the ‘free’ childcare hours. It means nurseries have to charge parents a hodge-podge of different fees to top-up the Government money and ensure they can cover their costs and make a profit. The Government has pledged to increase the hourly rate it pays nurseries – but hasn’t been explicit about how much per hour it will be paying.

The worry is that if the Government doesn’t pay a sufficient hourly rate either nurseries won’t be able to continue operating or parents will be charged top-up fees – effectively making the scheme far less effective.

The other worry is whether there are actually the spaces to meet the expected higher demand. This is why the Government is staggering the introduction of the scheme, to ensure the nursery sector can build up the supply to meet the demand. However, a recent study by charity Coram Childcare and Family found that only half of local authorities said there was enough childcare provision to meet demand in their area.

DID THE CHANCELLOR ANNOUNCE ANYTHING ELSE ON CHILDCARE?

Hunt also said that nurseries can change the ratio of staff to children for two-year-olds, moving it from one carer for every four children to one to five. There is no obligation for nurseries to adopt this, but it’s intended to free up more staff and mean that nurseries can take on more children (presumably to cope with the increased demand now more parents are entitled to free hours).

He also made two key changes to how people on Universal Credit can reclaim their childcare costs. For anyone increasing their work hours or taking on work for the first time, the Government will now pay the additional childcare costs upfront (currently the claimant has to pay for them and reclaim the money).

His next move was to increase the cap on the amount the Government will pay towards childcare costs. Currently the help parents can claim is capped at £646 a month per child and hasn’t increased in almost two decades despite childcare costs soaring. It will now rise to £951 for one child and £1,630 for two children.

By Laura Suter AJ Bell Head of Personal Finance