Chancellor Jeremy Hunt’s recent budget has pledged to expand the free provision of childcare hours, which the government hopes will reduce the financial burden on parents and help women back into work.
He stated:
“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 additional women working.”
Mr Hunt’s provisions will expand current childcare measures to provide 30 hours of funded childcare from the time when maternity or paternity care ends at nine months, until a child starts school. It will be introduced gradually to ensure there is enough supply.
Presently, families with children aged one and two do not receive support after parental leave ends and before the free 15 hours a week of free childcare is offered for three and four-year-olds (or 30 hours if both parents are in work and earn at least the national minimum wage or living wage. However, neither parent can earn more than £100,000 a year to use the scheme.)
Provision for two-year-olds is currently limited to 15 free hours a week for parents who claim certain benefits.
Under the new rules, from April 2024 parents of two-year-olds will qualify for 15 hours a week of free care. From September 2024 children from nine months will get 15 hours free childcare and from September 2025, all households with children under 5 will get 30 hours of free childcare a week. In all of these cases the households must be eligible i.e. both adults must work at least 16 hours a week.
In his Budget speech, Mr Hunt said:
“I don’t want any parent with a child under five to be prevented from working if they want to, because it’s damaging to our economy and [it’s] unfair, mainly to women,”
Whilst the provisions have mainly been welcomed, some have pointed out the measures do not help anyone struggling with childcare fees right now. Additionally, the schemes only cover the 38 weeks of term time - so although parents can use it across the year, it means fewer free hours a week, as 30 hours then becomes 22 hours.
Others however, argue that this could have a major impact on narrowing the gender pay and pension gap. Becky O’Connor - Director of Public Affairs at Pensionbee - pointed out:
"Previously, there was a significant gap of two to two and a half years between when a parent would have to go back to work after parental leave and when help with childcare costs would kick in.
“Staying in work for those two years could boost the eventual private pension pot of a parent on an average salary by around £12,000 (£205,000 rather than £193,000). With the impact of better salary progression factored in, this boost could be even greater.”
