Free childcare for working parents in England is expected to be expanded in the Budget to cover one and two-year-olds.

Currently, working parents with three and four-year-olds are eligible for 30 hours of free childcare per week.

The plans are part of a government drive to encourage more people to return to work to boost economic growth.

The Treasury is not formally commenting ahead of the Budget.

However it has not denied suggestions, first reported by the Guardian, that the hourly rate paid to childcare providers by the government would also be increased and that local authorities would be given funding to start setting up wraparound childcare provision in schools from September 2024.

Childcare costs in the UK are among the highest in the world and the government has been under pressure to provide more help to parents, including from some of its own MPs.

The rising cost of childcare has been widely seen as a deterrent for some parents to go back to work, or work full time.

The Guardian also reported that the government could introduce changes to the staff-to-child ratios for two-year-olds in childcare – moving from one carer for every four children to 1:5 to align with Scotland, which the Treasury also has not denied.

Supporters of the idea say it could help cut costs for parents.

However, the Early Years Alliance, which represents around 14,000 childcare providers in England, said relaxing ratios risked “severely compromising the safety and quality of care” and putting more pressure on the workforce during “a severe staffing crisis”.

The organisation’s chief executive, Neil Leitch, said reports of more spending on the sector “appear positive” but “the devil is in the detail”.

He said the government must ensure funding meets “the sharply rising costs of delivering places”.

Education policy is devolved but equivalent funding is expected to be announced for Wales, Scotland and Northern Ireland. The respective devolved governments would be able to decide how to spend that money.

Meanwhile, the government will also confirm that energy bill support will continue at current levels for a further three months.

Currently, the government limits the energy bill for a typical household to £2,500 a year but this had been due to rise to £3,000 on 1 April.

The chancellor is expected to resist calls from some Tory MPs to cut taxes.

With prices continuing to rise, he has privately been telling them: “The best tax cut right now is a cut in inflation.”

A planned rise in corporation tax, from 19% to 25%, is due to come in from 1 April.

However, under plans to be announced in the Budget, businesses will be able to mitigate this increase with a new system of capital allowances.

Other measures expected to be announced by Chancellor Jeremy Hunt include:

No further cash is expected to be made available for public sector pay but cabinet figures have expressed confidence that many of the industrial disputes were close to reaching a settlement.

The government has already announced that the Budget will include more help with childcare costs for families on universal credit.

The current £646-a-month per child cap on support for universal credit claimants is expected to be raised by several hundred pounds. They will also receive the funding upfront, instead of having to claim it back.

The childcare must be with an approved provider, and applies for 38 weeks of the year during term time – or 52 weeks if fewer than 30 hours are required per week.

Eligibility requires parents to work and earn a minimum amount of at least £152 per week on average to qualify.

Those who have an expected “adjusted net income” of over £100,000 are not eligible.