Presenting the spending review and the autumn statement in the House of Commons, George Osborne gave more detail on the policy.
In changes to the original proposals, there will also be an upper income limit per parent of £100,000 a year, which will also apply to tax-free childcare.
The Government claims this will mean savings of £215m by 2020-21.
Early years providers will receive an increase in the average hourly rate from 2017-18, which the Government says will be provided through a £300m a year investment.
There will also be at least £50m in capital investment for early years settings to provide the places.
This will be alongside the ‘first ever’ national funding formula for early years, schools and high needs ‘to ensure funding is fairly allocated’.
The formula is intended to ensure that funding is ‘transparently and fairly linked to children’s needs’.
The aim is to end the ‘unfair system’ where a child from a disadvantaged home in one school attracts half as much funding in another school, because of where they live.
There will be a detailed consultation on the new formula in 2016, and it will be introduced in 2017-18.
The Spending Review and Autumn Statement 2015 states, ‘The Government has also undertaken a review of the cost of childcare provision, and from 2017-18 will invest £300 million to increase the average hourly rate childcare providers receive, and at least £50 million of capital funding to create additional places in nurseries. This will be delivered alongside the introduction of a national early years funding formula and other reforms, to ensure funding is fairly allocated.’
The Government will reduce the local authority role in running schools and remove a number of statutory duties.
Tax credit cuts dropped
In a surprise announcement the Chancellor said he had ‘listened to concerns’ about the planned cuts to tax credits ‘ and the simplest option was not to phase in changes but to avoid them’, as they were being phased out anyway when Universal Credit comes in.
It was also confirmed that:
- universal infant free school meals will be protected
- the core FE funding rate for colleges would not be cut with funding for 16-to 19-year-olds will also be kept at the current rate per student
- there will be 500 new free schools creating 600,000 new school places, a step towards the Government’s goal of ending local authorities’ role in running schools and all schools becoming academies
- a new business-led body to improve the quality of apprenticeships by setting new standards
- large employers will need to pay an apprenticeship levy from April 2015, but this will be offset by an allowance of £15,000 for each apprentice they take on.
More reaction to follow