Treasury documents published after The Chancellor's speech in the House of Commons confirm 'that the hourly rate providers are paid to deliver the free hours offers will increase in line with the metric used at Spring Budget 2023 for the next two years' to support the sector to deliver the expansion of childcare.
It goes on to say, 'This reflects that workforce costs are the most significant costs for childcare providers and represents an estimated additional £500 million of investment over two years.
'Along with planned reforms to local funding rules, whereby Local Authorities (LAs) will have an eight week window to communicate final hourly funding rates to providers and will soon have to pass through at least 97 per cent of funding to providers, this gives providers more certainty on future funding so they invest in expanding their business.'
In his Budget, the Chancellor also pledged to help families with permanent cuts in taxation and invest £105m to build more special free schools.
Other measures revealed in today’s Budget include:
- Making Child benefit fairer for single/lone parents. By April 2026, Child Benefit will be based upon household income and not an individual’s income. From this April, the high-income charge threshold will be raised from £50,000 to £60,000. No one earning under £60,000 will pay a charge for Child Benefit.
- From 6 April, a 2p cut in National insurance, funded by a levy on vaping, scaling back the non-dom regime and a raid on owners of second homes. Employees' NI will be cut from 10 per cent to 8 per cent, and for the self-employed from 8 per cent to 6 per cent.
- Freezing fuel duty for 12 months.
- Spending £105m on special free schools over four years to provide more SEND provision.
- Making budgeting loans for universal credit claimants more affordable with repayments being spread over 24 months, rather than 12.
- Digitalizing the NHS.
In response, the Labour leader Keir Starmer, said, ‘Britain deserves better than a sticking plaster. We need to break the habit of 14 years and confirm May 2 as the date for the next general election.’
He went on to criticise the lack of measures on affordable housing and the cost of living. He urged the Government to confirm to parents eligible for the first phase of the extended childcare hours they will be able to secure a place after concerns have been raised about capacity.
Speaking to the BBC, the IFS said the tax cuts are being paid for by ‘uncertain measures’, claiming that we have been poorer for the last two years.