Press release

£300 million childcare boost for hard-working families under Universal Credit

Parents on Universal Credit will now be able to claim back 85% of their childcare costs when they move into work – up from 70%.

Universal Credit

Parents on Universal Credit (UC) are set to benefit from more support with their childcare costs from today, making it easier for them to start work or take on more hours.

Parents on UC will now be able to claim back 85% of their childcare costs when they move into work – up from 70%. This means a working family with 2 children can now receive up to £13,000 a year in childcare support under Universal Credit. This increase is expected to benefit up to half-a-million families once Universal Credit is fully rolled out.

Today’s change will boost childcare support in UC by around £300 million and builds on the government‘s commitment to ensure more affordable and available childcare for hard-working families across the country.

Employment Minister Priti Patel said:

We want all families to have the chance to get on in their lives, with the security of a regular pay packet that comes with a job. That’s why we are making sure parents can access good-quality childcare. Universal Credit is revolutionising welfare with people moving into work faster and earning more. Increasing childcare support will help break down one of the biggest barriers parents on lower incomes can face when moving off benefits.

Under Universal Credit, parents can start claiming childcare costs up to a month before they start their job and can continue to claim for up to a month after if their contract comes to an end.

This support gives parents the opportunity to focus on their new job from day one, and children the time to settle into a routine while protecting their nursery place when their parents are in between jobs. It also helps people to take on temporary work, or increase their hours, which are some of the main benefits of UC.

Parents can claim back childcare costs no matter how many hours they work, on top of the money they already receive to help with the costs of bringing up a child, such as child benefit. Working parents claiming Universal Credit can receive up to £646 a month for one child and £1,108 for 2 or more children.

From today the government is also simplifying work allowances – the amount people can earn before their Universal Credit is gradually reduced – and giving people extra help to progress in work. Jobcentres have contacted claimants directly to let them know how they can access further advice and support. As well as additional work coach support, claimants may also qualify for help from the Flexible Support Fund, to help them increase their hours and earnings.

Universal Credit is transforming the welfare system combining 6 existing benefits in to a single monthly payment – mirroring the world of work.

Universal Credit will be available in every jobcentre across the country by the end of this month and over 400,000 people have already made a claim, with over 10,000 new made every week.

More information

Under Universal Credit, families with 1 child can receive up to £646.35 a month and families with 2 or more children can receive up to £1,108.04 a month.

Universal Credit claimants will now be able to claim back up to 85% of their childcare costs, increasing from up to 70% previously, which could be worth an extra £2,000 a year.

The government has launched a new website detailing the full range of childcare support offered to parents and carers throughout their working lives, which is available at: www.gov.uk/childcaresupport

This increased support is part of a new government package to make childcare more affordable and more accessible, and which also includes doubling from 15 to 30 hours free childcare for nearly 400,000 working parents of 3 and 4 year olds, and introducing Tax-Free Childcare which will be available to up to around 2 million working families.

Universal Credit is now available in 98% of all jobcentres, including all of the north west, where it is available to couples and families too.

Universal Credit will eventually replace:

  • Jobseeker’s Allowance
  • Income Support
  • Employment and Support Allowance
  • Working Tax Credits
  • Child Tax Credits
  • Housing Benefit

Read the report Universal Credit at Work – December 2015 produced by the Department for Work and Pensions.

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Published 11 April 2016