The measure will be introduced in phases, with 15 hours of free childcare for working parents of two-year-olds coming into effect in April 2024 and 15 hours of free childcare for working parents of nine months to three years old in September 2024.

The extended childcare support will cover over £4.1bn by 2027-28 and the eligibility criteria will match the existing three to four-year-old 30 hours offer.

The funding paid to nurseries for the existing free hour’s offers will also be increased by £204m from this September rising to £288m next year.

Schools and local authorities will be funded to increase the supply of wraparound care so that parents of school-age children can drop their children off between 8 am and 6 pm – tackling the barriers to working caused by the limited availability of wraparound care.

The childcare costs of parents moving into work or increasing their hours on Universal Credit will be paid upfront rather than in arrears, with the maximum claim increased to £951 for one child and £1,630 for two children – an increase of around 50%.

In recognition of both the importance and short supply of childminders, incentive payments of £600 will be piloted from autumn of this year for those who sign up to the profession (rising to £1,200 for those who join through an agency) to increase the number available and increase choice and affordability for parents.

Laura Hinton, head of PwC’s UK tax and people consulting business, said: ‘The government’s plan to expand the 30 free hours to children under three is a big boost to working parents juggling the cost of childcare. It may take time for parents to feel the benefit, given we won’t yet have the childcare facilities or workers in place to cover the need.

‘The policy is also likely to be well received by the broader voting public; our research shows that people across the political spectrum, including non-parents, believe incentives for parents of young children are fair – more so than measures to support the over the 50s into work.

‘Our recent Women in Work report found that high childcare fees – which are some of the highest in the developed world and represent almost a third of the income of a family on the average UK wage – have been pricing women out of work and causing the gender pay gap to widen.’

Pam shared her top key takeaways from last weeks budget, you can read them in her blog ‘Breaking down the 2023 Budget’