Jeremy Hunt commits to free childcare pledge despite funding fears

6 March 2024, 13:34 | Updated: 6 March 2024, 14:52

Chancellor Jeremy Hunt today pledged to "guarantee rates" for nurseries as part of the government's free childcare plans in Wednesday's spring Budget.

In what the Chancellor labelled a "landmark offer", Mr Hunt guaranteed "the rates that will be paid to childcare providers" in order to deliver the Government's expanded free childcare pledge.

Jeremy Hunt reiterated he was "sticking to our plan" during his speech to Parliament, with the MP for South West Surrey confirming government plans to guarantee working parents of two-year-olds in England access to 15 hours of free childcare.

The proposed scheme will kick-in from April 2024.

The plans aim to fix a "broken" childcare system, encouraging an extra 60,000 parents to re-enter the workforce over the next four years, Hunt claimed.

Combined household income will also now be taken into account where child benefits are concerned, with the taxable threshold on income now kicking in at £60,000 - rising from the previous figure of £50,000.

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"I am today guaranteeing rates for childcare providers to deliver the landmark offer," he said.

“There’s no quick or easy fix to the UK’s childcare challenge but it’s clear that bolder action could deliver a sizeable economic prize.”

The Chancellor did not elaborate on what those guaranteed rates would be.

A pledge that was initially tabled last March, it became one of the government's most attention grabbing Budget pledges, assisting parents hoping to return to work who are facing soaring childcare costs.

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Under the plans, working parents of two-year-olds will now be able to access 15 hours a week of free childcare, extended to working parents of all children older than nine months from September as part of the staggered rollout.

This figure would expand to 30 hours by 2025.

However, despite Hunt's renewed pledge, some industry leaders continue to warn of gross underfunding.

Recent months have seen underfunded nursery bosses warn they will be unable to meet the pledge if further funding was not provided as part of the Budget.

It comes as Mr Hunt noted the economy is expected to grow 0.8% this year and 1.9% next year, 0.5% higher than the OBR's autumn forecast.

It comes as more than 55 per cent of those in the industry said they could not meet local demand for nursery places.

As a result, eligible families looked likely to miss out on the offer.

The measures formed part of a spring budget that included a 5p freeze in fuel duty for a further 12 months, the introduction of a £5,000 "British ISA" tax allowance for savers looking to invest in UK-listed companies and tax breaks for the British film industry.

It's a budget that also saw the Chancellor cut National Insurance rates by 2p.