Universal credit recipients will be able to claim significantly higher amounts for childcare costs starting from the end of June, according to a recent government announcement. Parents on the benefit will now be able to claim back £951 for childcare costs for one child and £1,630 for two or more children, marking a 47% increase. This policy, announced as part of the 2023 Budget, will apply across Britain.
However, Labour argues that the plans are insufficient and that there will be no increase in childcare workers this year. Currently, eligible individuals in England, Scotland, and Wales pay childcare costs upfront and later claim a refund. Until now, the amount parents on universal credit could claim had been frozen at £646 per month per child for several years. During this time, childcare costs rose by 44% since 2010, according to analysis from the Trades Union Congress.
The government also plans to support eligible parents with their first month of childcare costs when they either enter work or increase their hours by providing childcare funding upfront. These parents will receive up to 85% of their childcare costs back before their next month’s bills are due. Additionally, the Department for Education has launched a consultation aimed at increasing the early years’ workforce in England. A recruitment campaign to attract and retain talent is planned for early next year, which will consider introducing new accelerated apprenticeship and degree apprenticeship qualifications.
In the Budget, Chancellor Jeremy Hunt 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. 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 by campaign group Pregnant Then Screwed found that 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”. Stride 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.”
Shadow education minister Helen Hayes criticised the plans, saying: “The Conservatives are piling pressure on a broken system. Their plans come with no plan to increase the workforce, who are so critical to delivering an expansion of childcare. What parents and children both need is higher standards, better availability across our country, and a flexible system that supports families from the end of parental leave to the end of primary school.”
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