Families on benefits will be able to claim hundreds of pounds more in childcare payments from the end of June, the government has announced.
People on Universal Credit will see their maximum childcare payments rise by nearly 50% from 28 June as the government tries to get more people back into work.
Parents eligible for help through the Universal Credit system will be able to claim back up to £951 for one child and £1,630 for two or more children – an increase of 47% from the previous caps of £646 for one child or £1,108 for two or more children.
Parents who are eligible for support will also have some of their childcare costs paid for upfront for the first month if they either become employed or increase their work hours, in a move designed to help those struggling to take on a job or getting into debt under the current system due to the hefty upfront costs.
Those parents will receive up to 85% of their childcare costs back before their next month’s bills are due, the Department for Work and Pensions (DWP) said.
The shakeup of the benefits system was announced as part of Jeremy Hunt’s budget in March and is aimed at encouraging claimants into work or to increase their hours.
Mr Hunt also announced an expansion of childcare in the budget. In households where all adults work at least 16 hours, every child from nine months old to school age will get 30 hours of free childcare per week by September 2025.
The chancellor’s spring budget came as unemployment rose to 1.3 million in the month to March 2023, while around 2.5 million people are thought to be out of work because of long-term sickness.
Minister for Children, Families and Wellbeing Claire Coutinho said: “Childcare shouldn’t be a barrier to work, but the expense has previously meant parents have had to choose between working or looking after their child.
“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.”
The shakeup by the DWP is accompanied by a consultation from the Department for Education this week aimed at increasing the early years’ workforce in England.
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A recruitment campaign will also be launched next year and will look at introducing new accelerated apprenticeship and degree apprenticeship routes.
Labour’s 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.”