PARENTS on universal credit will be able claim hundreds of pounds more to cover childcare costs from the end of June, the government has announced.
The government will allow parents on the benefit to claim back £951 for childcare costs for one and £1,630 for two or more children – a 47% increase.
The policy was announced as part of the 2023 Budget and applies across Britain.
Labour said the plans did not go far enough and there would be no increase in childcare workers this year.
At the moment, people in England, Scotland and Wales who are eligible for support pay childcare costs upfront and then claim a refund.
Until now the amount parents on universal credit could claim had been frozen at £646-a-month per child for several years. Meanwhile, the cost of childcare increased by 44% since 2010, according to analysis from the Trades Union Congress.
The government announced it will also support eligible parents with their first month of childcare costs when they either enter work or increase their hours, by providing childcare funding upfront. Those parents will receive up to 85% of their childcare costs back before their next month’s bills are due.
In the Budget, Chancellor Jeremy Hunt also extended the current scheme offering some families 30 free hours of childcare per week to cover younger children. The changes will be phased in for households in England where the parent or parents earn at least £152 a week but less than £100,000 a year.
The cost of childcare in the UK is among the most expensive in the world, according to the Organisation for Economic Cooperation and Development (OECD). For a couple with two young children childcare costs take up nearly 30% of their income, according to the OECD.
The average annual price for full-time nursery childcare in England for a child under-two was more than £14,000 in 2022, according to children’s charity Coram.
A survey of 24,000 parents, which was published in March by campaign group Pregnant Then Screwed, found 76% of mothers who pay for childcare feel it no longer makes financial sense for them to work.
Work and Pensions Secretary Mel Stride said the changes will “cut inactivity and help grow the economy”. Adding “These changes will help thousands of parents progress their career without compromising the quality of the care that their children receive. By helping more parents to re-enter and progress in work, we will be able to cut inactivity and help grow the economy.”