Parents of one and two-year-olds in England will be entitled to 30 hours of free childcare a week, under a £4bn giveaway expected to be announced in Wednesday’s Budget.
The significant expansion of early years entitlements is part of a series of childcare measures to be announced by chancellor Jeremy Hunt. He is also likely to increase the funding providers receive for places, according to people close to discussions.
The drive to make childcare more affordable and accessible comes as Hunt seeks to reverse a rise in labour inactivity by making it easier for parents to work.
At present, parents of three and four-year-olds can claim 15 or 30 hours of free childcare a week during term-time, but the entitlement is not universally available for younger children.
Plans first reported by The Guardian will extend the entitlement to parents of one and two-year-olds. But it remains to be seen over what timescale the expansion will take place, or whether funding will be reallocated from other areas of early years spending.
The government will also increase the funding nurseries receive for the free hours, addressing the concerns of providers, which insist the amount they receive per hour falls far short of their costs.
Research by the Early Years Alliance, a trade body, found the government in 2021 gave nurseries approximately £4.90 for each funded hour, despite estimating that it would cost about £7.50 per hour per child to provide care.
EYA head Neil Leitch said underfunding had left the system “on its knees”. While a £4bn commitment sounded “impressive”, he said the “devil is in the detail”, and that an expansion would be unsustainable if the government did not significantly increase per-hour funding.
If money for more places did not match “sharply rising” costs of providers, “what is currently a crisis will end up in catastrophe”, he added.
Providers have previously called for the free hours system to be totally overhauled, something Labour has committed to if it wins the next election.
People close to discussions said the government would commit an extra £200mn to existing hourly entitlements in 2023-24, rising to closer to £300mn the next year.
The increase will top up funding that in 2021-22 amounted to about £4bn — an increase of about 5 per cent next year.
The government will also offer new self-employed childminders a bonus of £500, or £1,000 if they join through an agency, and relax ratio rules enabling one adult to look after five two-year-olds, up from four children under-three at present.
Hunt on Sunday said he would reform the universal credit benefits system to allow parents to claim support for childcare upfront, rather than in arrears. He will also increase the cap on what can be claimed from £646 to £950 for one child, and more for two children.
The Treasury declined to comment.