Childcare costs: families on Universal Credit eligible for more financial support from 28 June

Families on Universal Credit will be able to claim back a bigger chunk of their childcare costs under government plans to get parents working more so they can help drive up economic growth.

From the end of June, the amount that eligible low-income households can get back will rise by hundreds of pounds. Labour says the announcement will “pile pressure” on the childcare system because there’s “no plan” to increase the availability of places.

What are the changes?

At the moment, people on Universal Credit who work - or have a job offer - are able to claim back up to £646 a month in childcare costs if they have one child, and up to £1,108 if they have two or more.

From 28 June, those totals will rise to £951 and £1,630 respectively.

Eligible parents entering work or increasing their hours as a result of these changes will also get the money upfront for the first month - and up to 85% of their childcare costs back before the following month’s bills are due to be paid.

Why is the government doing this?

Work and Pensions Secretary Mel 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”.

Are there enough childcare places to meet higher demand?

Concerns have already been raised that there aren’t enough childcare places available for parents to take advantage of the extended financial support.

In March, the latest annual report by the charity Coram Family and Childcare found that just half of local councils in England reported there were sufficient places for under-2s, compared with 57% in 2022

The Department for Education said it was trying to address this by launching a consultation today, exploring ways of increasing the size of the early years workforce. Ministers are also planning to introduce new accelerated apprenticeships - with a recruitment campaign planned for early next year.

How has Labour responded?

Shadow Education Minister Helen Hayes said: “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”.

“Labour has set out clear plans for fully funded breakfast clubs for every child in every primary school in England which can be delivered and will not leave parents scrambling to find provision”.

What about the extension of 30 hours’ free childcare?

This announcement is separate to the one Chancellor Jeremy Hunt made in the Spring Budget - where he revealed that the government’s free childcare programme in England would be extended to all children between the ages of nine months and five.

The scheme isn’t yet running and will take two years to be fully scaled up.