Free childcare allowance to rise to a maximum of £2000

Prime Minister David Cameron will increase the tax-free allowance for childcare and extend the program to all children under the age of 12.

The childcare allowance will increase to £2,000 from a currently planned £1,200 pounds, starting in autumn 2015, according to a statement from Cameron’s office.

“Tax free childcare is an important part of our long-term economic plan,” Cameron said in the statement. “It will help millions of hard-pressed families with their childcare costs and provide financial security for the future.”

Today’s announcement comes a day before Chancellor George Osborne delivers his annual budget, about which he has said that while Britain is recovering, “the job is not yet done” to reduce the country’s deficit. It marks an attempt by Cameron’s Conservatives and their Liberal Democrat coalition partners to rebuff Labour’s claims that they are ignoring the rising cost of living, leaving families worse off.

The tax-free amount will apply to all children under 12 in the first year, rather than previous plans to allow children to gradually qualify over a seven-year period.

The government will also invest £50 million in 2015-2016 to provide a “pupil premium” for disadvantaged children aged three and four. The money will help nurseries and schools employ more highly qualified staff, for example, or to increase access to services such as speech and language specialists, according to the statement.