Working parents who claim Universal Credit can get up to £1,630 towards their monthly childcare costs from today, June 28.
The package of changes for working parents, announced by Chancellor Jeremy Hunt in the Spring Budget, mean that the Department of Work and Pensions (DWP) will now pay childcare costs up front, as well as increasing the amount that parents can claim back for their childcare costs to £951 for one child and £1,630 for two or more children.
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The changes are a key part of the Government’s drive to reduce economic inactivity announced in March's 'back to work' budget. Around £3.5bn will be invested over five years to help as many people as possible into work, including more than two million parents who claim Universal Credit.
The new limit for childcare costs is a rise of 47% from the previous limits of £646 for one child or £1,108 for two or more children and is the biggest ever expansion to childcare provision, worth a total of £900m. Of around 5.8 million people who claim Universal Credit, 40% are in employment.
As well as increasing the amount that parents can claim, the Government is also helping cover the costs for the first month of childcare when they enter work or increase their hours. Described by the DWP as "one of the most significant barriers to parents working and helping to grow the economy", charities had previously warned the current scheme of paying and claiming a refund risks people getting into debt.
With average full-time nursery fees costs running at around £263 per week and £228 for a childminder, according to the National Childbirth Trust (NCT), parents can struggle to return to work as they have to find the first month's fees in advance before getting any support. Eligible parents will now receive up to 85% of those childcare costs back before their next month’s bills are due – meaning they should have money to pay one month in advance going forward.
Mel Stride, Secretary of State for Work and Pensions, said: “We are supporting thousands of parents to return to work, progress their careers and boost their finances while making sure they have affordable childcare. By removing one of the biggest barriers to work for parents in Britain we are giving families the chance of a better future while doubling down on this government’s pledge to grow the economy and bear down on inflation.”
The Department for Education is also launching a consultation to boost the early years workforce and remove unnecessary burdens that the childcare sector face in preparation for the expansion to free childcare from next year. From April 2024, working parents will be able to access 15 free hours for two-year-olds, which will be expanded to 15 free hours from nine months to the start of school from September 2024, rising to 30 free hours from September 2025.
The Government is seeking to boost the early years workforce, and is now consulting on ways to encourage more people to consider childcare as a career, like through new apprenticeship routes. In addition, the hourly rates paid to providers to deliver the Government’s free childcare offer for two-year-olds will increase by 30% in September, up to an average rate of £8.
Claire Coutinho, Minister for Children, Families and Wellbeing, said: “We are delivering the largest ever expansion of free early education in England to make sure parents are able to access the high-quality, affordable childcare that they need. A working parent using 30 hours of childcare a week could save an average of £6,500 a year thanks to the new free hours offer alone. “Parents might be surprised just how much support they’re eligible for – check all the details on our dedicated Childcare Choices website.”
