Childcare payments for Universal Credit overhauled after NDNA campaign

As part of the Government’s biggest ever expansion to childcare provision, low-income families will be able to access increased childcare support from 28 June.

The Department for Work and Pensions will raise the amount that parents across the UK 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. This is a rise of 47% from the previous limits of £646 for one child or £1,108 for two or more children.

Eligible parents on Universal Credit can claim 85% of their childcare costs up to these thresholds but they had not been reviewed for a number of years, meaning the thresholds had not kept up with rising costs.

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, by making Universal Credit childcare payments up front, instead of in arrears. This adopts a proposal called for by NDNA in parliamentary evidence sessions and removing an issue of planning and cash flow from settings while addressing a significant barrier to parents working.

NDNA’s Chief Executive Purnima Tanuku OBE said,

“The announcements on changes to Universal Credit are really welcome as it will help more families take up high-quality childcare places that support them back to work. The updated threshold figures are long overdue but need to continue to reflect rising costs of delivering childcare places or parents and providers will end up paying the price.

“Childcare providers need the certainty around how many children they can accept in a safe and sustainable way and upfront payments will help with cash-flow in nurseries and ensure parents can access those places. We have supported parent challenges to the old system and welcome the fact that the Government has recognised the reality of the situation.

“We know that take up of places through this scheme can be low so we need to see actions to promote awareness of eligibility among families for this support. However, to get more families into work there needs to be more places for children and due to current and historic underfunding we have a workforce crisis and nurseries closing faster than ever.

“Three quarters of providers say they would need more staff to take on more children and we know from our research that nurseries in areas of deprivation are most likely to close. The Government has to tackle the root of these problems or there will not be enough providers to be able to meet the needs of children and working families.”

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.”

Read about NDNA’s support for a legal challenge against the old payment in arrears rule.

Read about NDNA’s evidence to MPs.

Read the full report.

  • UK

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