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Universal Credit: Childcare Funding to Increase by 47%

children services

The Department for Work and Pensions (DWP) has announced plans today to expand childcare funding which will come alongside the Government’s wider initiative to provide free childcare for children aged nine months to the start of school. This was announced as part of the 2023 Budget and aims to support parents in advancing their careers while ensuring quality care for their children.

What is the Government offering? 

The DWP is introducing measures to provide additional financial assistance for families, offering support of up to £522 per month. In a significant change, the DWP will provide immediate help to parents with their first bill instead of waiting until later, enabling them to better manage their budgets. This compares to current rules as those who qualify for assistance must pay childcare expenses upfront and subsequently claim a reimbursement.

By April 2024, working parents of two-year-olds will have access to 15 free hours, and from September 2024, children aged nine months to the start of school will be eligible for the same. This will gradually increase to 30 free hours from September 2025.

Furthermore, the DWP will raise the monthly allowance for childcare costs on Universal Credit, allowing parents to claim up to £951 for one child and £1,630 for two or more children. This represents a 47% increase from the previous limits. 

Early years workforce

To enhance the early years workforce and promote childcare as a valuable and rewarding profession, the Department for Education in England will launch a consultation aimed at alleviating unnecessary burdens faced by the childcare sector. This initiative follows extensive engagement with the sector to determine how best to support their effective deployment and staff training.

To attract and retain talented individuals in the field, the Government plans to launch a recruitment campaign in the early part of next year and explore the introduction of accelerated apprenticeship and degree apprenticeship pathways, enabling staff at all levels to pursue careers in the childcare sector.

Research 

For several years, the amount that parents receiving universal credit could claim had remained at £646 per child per month. However, the Trades Union Congress conducted an analysis revealing a 44% increase in childcare costs since 2010. According to the Organisation for Economic Cooperation and Development (OECD), childcare in the UK is among the most costly worldwide. The OECD states that for a couple with two young children, childcare expenses consume almost 30% of their income.

Moreover, as reported by children’s charity Coram, the average yearly cost of full-time nursery childcare in England for a child under two exceeded £14,000 in 2022.

A recent survey conducted by campaign group Pregnant Then Screwed, which involved 24,000 parents, also revealed that 76% of mothers who pay for childcare believe that it is no longer financially viable for them to work.

Responses

Minister for Children, Families and Wellbeing, Claire Coutinho, highlighted the Government’s commitment to supporting families through the largest-ever expansion of free childcare as this initiative aims to result in an estimated average saving of £6,500 per year for working parents utilizing 30 hours per week of childcare.

Work and Pensions Secretary Mel Stride expressed that these modifications will decrease inactivity and contribute to economic growth. He emphasized that these changes will allow numerous parents to advance their careers while ensuring the quality of care their children receive.

However, shadow education minister Helen Hayes criticised the Conservative party for adding pressure to an already broken system. She claims that there is no plan in place to expand the workforce, which is crucial for implementing childcare expansions. Hayes also asserted that what parents and children truly need are higher standards, improved accessibility throughout the country, and a flexible system that supports families from the end of parental leave until the completion of primary school.

Final thought 

Overall, on the surface, these measures demonstrate a commitment from the Government to support families and reduce barriers to employment opportunities. However, there are flaws, as the shadow education minister Helen Hayes notes, plans for the workforce are not extensive, nor is there an established plan for improving accessibility and quality of childcare. 

Curia’s Levelling Up Commission

Curia is holding the Levelling Up Commission this year, seeking to implement the Government’s Levelling Up White Paper and find pragmatic solutions to regional disparities across the UK.

Through roundtable meetings with MPs and senior leaders of local and regional government from across the UK, quantitative data analysis and regional sprints, the Commission intends to set out a series of recommendations to consider how regional inequalities can be reduced from the perspective of public services in four key areas:

Health and Social Care

Housing and Homelessness

Education, Skills and Training

Crime, Justice and Rehabilitation

To hear thought leaders discuss levelling up in health and social care, signup to the Commission first inquiry session here.

If you are interested in working with the Levelling Up Commission, please reach out to our policy lead Shivani Sen at shivani.sen@chamberuk.com

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