In the 2023 Spring Budget, Jeremy Hunt has announced 30 free hours of childcare a week for children from nine months to two-year-olds, which was already in place for three and four year olds in the UK.
Mr Hunt also announced changes to Universal Credit childcare payments. The new childcare scheme is a part of his drive to encourage more people to return back into the workforce.
All the parents on universal credit can claim childcare support and receive it upfront as per the budget.
Mr Hunt brought this change to rectify the issues with the current scheme. Warnings by charities have pointed out that the system of paying-and-then-claiming a refund risks people getting into debt.
According to the Organization for Economic Cooperation and Development (OECD), the childcare cost in the UK is among the most expensive in the world.
Parents in the UK are having to give up more than half of their paycheck to cover the costs of childcare, according to research conducted by Business in the Community (BITC).
As per the study, the UK childcare costs parents up to 65% of their wage.
In the Spring Budget 2023 put-forth by the Chancellor, he increased the amount parents can claim on childcare. Today, he unfroze the financial assets frozen since 2006 despite inflation soaring with the budget.
The amount parents on universal credit can claim on childcare rose from £646 for a single child to £950. For two children, it rose from £1,108 to £1,630, according to The Times. It represents an increase of almost 50%.
According to Coram, the Charity for Children in the UK, the average annual price for full-time nursery childcare for a child under-two was more than £14,000 in 2022.
Currently, the UK is facing a cost-of-living crisis with a stalling economy. Hence, an increase in funding for the existing programme of free-childcare for three-year-olds helps parents to a great extent.
It works well with an increase in the hourly rate paid to childcare providers by the UK government to deliver their existing 30 hours weekly entitlement.
The Chancellor also announces relaxed staff-to-child ratios with minimum from 1:4 to 1:5 for two-year-olds at the UK.
A separate survey from the National Day Nurseries Association recently published showed that 98.4% of nurseries in England say their funding rates do not cover delivery costs.
Nurseries across the UK get forced to close or reduce their services at an alarming rate as they struggle to recruit and retain staff. The budget helps in resolving the issue as well.