Universal Credit’s maximum childcare payments will rise nearly 50%

Low-income families will have more money in their pockets from the end of the month as part of the biggest ever expansion of childcare provision. The maximum Universal Credit childcare payments will rise almost 50 per cent from June 28, going up to £1,630 a month.

The Government’s plans to increase childcare provision will allow struggling families to access increased support worth a total of £900 million.

The Department for Work and Pensions will raise the amount that parents in Great Britain can claim back monthly for their childcare costs on Universal Credit up to £951 for one child and £1,630 for two or more children.

At the same time, the Government will help eligible parents cover the costs for the first month’s childcare when they enter work or significantly increase their hours, removing one of the most significant barriers to parents working and helping to grow the economy.

Those parents will also receive up to 85 per cent of their childcare costs back before their next month’s bills are due – meaning they should have money to pay one month in advance going forward.

Helping the economy grow

Mel Stride, Secretary of State for Work and Pensions, said:

“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.”

To boost the early years workforce and encourage more people to consider childcare as a valuable and rewarding career, the Department for Education is also launching a consultation in England to remove unnecessary burdens the childcare sector face. This follows extensive engagement with the sector to understand how they can be supported to deploy and train up their staff most effectively.

This is alongside a package of measures to make sure the Government’s historic expansion of free childcare is delivered successfully – with 15 free hours available for working parents of two-year-olds from April 2024, 15 free hours from nine months to the start of school available from September 2024, rising to 30 free hours from September 2025.

From September, the hourly rates paid to providers to deliver free childcare for two-year-olds will increase by 30 per cent from an average rate of £6 to £8. This represents a significant increase in funding for early years.

The Government will also launch a new recruitment campaign early next year to attract and retain talent and consider how to introduce new accelerated apprenticeship and degree apprenticeship routes so everyone from junior staff to senior leaders can easily move into a career in the sector.

Government investing £3.5 billion over five years to boost workforce participation

Minister for Children, Families and Wellbeing Claire Coutinho said:

“We are supporting families with the largest ever expansion of free childcare, making sure that places will be available for parents who need them. This will save a working parent using 30 hours a week an average of £6,500.”

“We have already announced plans to boost the amount government pays childcare providers, and now we’re knocking down barriers to recruiting and retaining the talented staff that provide such wonderful care for our children.”

This package represents a key pillar of the Government’s drive to reduce economic inactivity. In total, the Government is investing £3.5 billion over five years to boost workforce participation, including helping as many people as possible, such as parents, into work which will in turn grow the economy.

Summary

According to the Organisation for Economic Cooperation and Development (OECD), the cost of childcare in the UK is among the most expensive in the world, taking up on average nearly 30% of the income of a couple with two young children.

Ultimately, by investing in quality childcare, we invest in the future of our children and the prosperity of our society as a whole by helping business thrive.