The chancellor announced 30 hours of free childcare for all under-5s from the moment maternity care ends in his “back to work” Budget on Wednesday.
Saying the UK economy was “proving the doubters wrong”, the chancellor also announced that Britain will avoid a recession.
However, shadow chancellor Rachel Reeves said the government was “a bit late to the party” when it comes to childcare reforms.
Speaking about the childcare plans announced in the Budget, she told BBC Radio 4's Today programme: “We back these plans. We wouldn't have got into this mess in the first place because we wouldn't have scrapped the infrastructure that the last Labour government created.
The Resolution Foundation think tank welcomed what it called “much-needed help for parents” with the biggest increase in childcare support on record set to encourage more parents to work and make it worthwhile for many to work longer.
The Resolution Foundation’s analysis said that under the current childcare system, a single parent of a one-year-old earning the National Living Wage would see their income fall after childcare costs by £370 if they moved from 25 to 35 hours of work a week. However, under the new system, the same single parent would receive an income boost of £700.
It said the richest fifth of households were set to gain £180 on average from the extra childcare entitlement, compared to £130 for the middle fifth of households, and £20 for the bottom fifth.
However, Mr Hunt has been forced to defend the speed of the rollout of the scheme, which will not be fully available until September 2025.
So, how will the policy be introduced and who is eligible?
Who is eligible?
Currently, all three and four-year-olds are entitled to a free part-time nursery education place for 15 hours a week, 38 weeks a year.
They qualify for 30 hours of free childcare if both parents earn the equivalent of at least 16 hours a week on the national living wage. This means the vast majority of working families qualify although the very richest (those making more than £100,000 are not eligible).
The expanded scheme will apply to parents with one-and two-year-olds who meet the wage criteria. The expansion will also see an increase in funding by £288m by 2024-25 for the existing programme of free childcare for three-year-olds.
When does it start? Stage 1 - April 2024
From April 2024, children aged two years and up will be entitled to 15 hours of free childcare a week. This will mark the first stage of the policy which the government has broken up to ensure there are enough nursery workers in place to meet the increased demand.
The offer of free childcare for working parents will cover half a million parents under the first phase.
Mr Hunt said: “It's a huge change and we are going to need thousands more nurseries, thousands more schools offering provision they don't currently offer, thousands more childminders.
“We are going as fast as we can to get the supply in the market to expand.”
Stage 2 - September 2024
In the second phase, children aged from nine months will benefit from 15 free hours of childcare a week from September 2024, helping a total of nearly a million parents.
Mr Hunt said the move was “the right thing to do because we have one of the most expensive childcare systems in the world”.
He added: “We know it is something that is a huge worry, for women in particular, that they have this cliff-edge when maternity leave ends after nine months, no help until the child turns three and that can often be career ending.
“So I think it is the right thing to do for many women, to introduce these reforms and we are introducing them as quickly as we can because we want to remove those barriers to work.”
Stage 3 - September 2025
The final stage of the policy rollout will see it reach its completion, with all children aged nine months and over eligible for 30 hours of free childcare.
But on Wednesday, the Institute for Fiscal Studies (IFS) warned it was “highly uncertain” what impact Jeremy Hunt's extension of free childcare will have on the labour market and whether it would encourage more people back to work.
In his Budget analysis, IFS director Paul Johnson said such a significant move would bring “risks” for the childcare market if it was not properly funded.
