Increased support with childcare costs through Universal Credit
Childcare costs are the topic of many of the queries we receive through our helpline and can be a source of stress on the finances of many families. We also know that childcare providers have been under significant pressure for some time trying to keep their businesses afloat in the face of rising costs, including for heat and electricity, business rates and staff wages.
Since the introduction of Universal Credit, and its predecessor Working Tax Credits, the maximum amount of support that working families could claim towards their registered childcare costs has been fixed at £646.35 per month for one child or £1,108.04 for two or more children. These figures represent 85% of the maximum registered childcare costs that a household could claim help with through Universal Credit. The result of inflation and rising costs has meant that over the years these figures have fallen behind the amount that the average parent pays towards their childcare bill.
The Chancellor announced in the Spring Budget that from July 2023 these maximum figures will increase by almost 50% to £951 per month for one child and £1,630 for two or more children. This means that through Universal Credit parents who have one child in registered childcare will receive 85% of childcare costs up to £1,118 per month, and £1,917 per month for two or more children. These higher levels of support are much more in line with the reality of the childcare bills that parents are paying.
In addition, the Chancellor has also committed to increasing these figures in line with the Consumer Price Index each year until 2027/28, meaning that as registered childcare costs rise over time the support parents receive will remain more aligned with any increases in their childcare bills.
In certain circumstances parents in Northern Ireland may also be able to receive additional support through the Adviser Discretion Fund towards childcare costs if they are required to pay a childcare bill up front – such as when moving into work or increasing hours. Through this fund the Department for Communities can pay the initial childcare bill instead of the parent having to pay their costs upfront and then claim support back.
Extension of 30 hours free childcare scheme in England
The Budget also saw the announcement of the extension of the 30 hours free childcare scheme in England. As this scheme is not in place in Northern Ireland, families here will not benefit. Equivalent funding will be provided to Northern Ireland, but there is no guarantee this will be invested in childcare.
To discuss how these changes to Universal Credit may impact you, contact the Family Benefits Advice Service for a free, personalised ‘better off’ calculation. We can help you work out if you will be better off on Universal Credit or claiming an alternative form of childcare support. Freephone 0800 028 3008 or email email@example.com.