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The Chancellor's 2023 budget on childcare explained - so far!

The childcare sector featured frontline in the March 2023 budget. Below we have shared some of the key points and our response to these changes.

For parents:

The Budget was focused on growth and getting the country back to work. The following reforms have been set-out, to begin in stages from September 2023.

  • 700,000 families on Universal Credit will get childcare support up front instead of having to reclaim it

  • People on Universal Credit will be able to claim £951 each month for childcare for one child, and £1,630 for two – up from £646

  • From April 2024, working parents of two-year-olds will be able to claim 15 hours of free childcare per week

  • From September 2024 working parents of all children over 9 months will be able to claim 15 hours

  • From September 2025, working parents will be able to claim 30 hours per week for children aged over 9 months until they begin school

For children:

  • Ratios: The staff - child ratios for 2 - 3 yr olds, can be increased from 1 staff member to 4 children to 1 to 5. This brings the ratios in-line with Scotland & other European countries.

For nursery providers:

  • Wraparound Care: Schools will share £145m per year to provide Breakfast Club & After-School services

  • Nursery providers: Settings currently providing the funded 30 hours to 3-and-4 year-olds were offered £204m. The funding gap for providers is currently £2.35bn

  • A sum of £4.1bn has been allocated to fund the new programme of places beginning next year. This is over expected to be £1 billion short of what will be required

What this means is that while the budget will increase the demand for Early Years places, however we are concerned with how providers will be able to supply these places, especially as the ‘free early year places’ are increasingly under-funded by the government.*

*According to the NDNA, the average setting loses more than £32,000 a year for their 15-hour funded places for three-and four-year-olds. The estimated funding shortfall for 3 & 4 year-old places is £2.31 per hour, up from £1.87 in 2021.

What are Rosedene’s thoughts?

The chancellor is right to have finally recognised the importance of early years in both offering the best start for children, and for the role it can play in delivering economic productivity by supporting people into work. However, it’s important to understand that the early years sector, which has been hit hard by increasing under-funding from the government, inflationary pressures, recruitment challenges and consequently seen over 5000 setting closures in the UK over the past 12 months.

We await further details from the local authorities and what the above measures will mean and when we can expect these to come into full effect. For further questions please email us at:

For further reading on the budget:

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