Working parents on Universal Credit set to receive up to £20,872 a year in childcare support

Parents on Universal Credit can now receive up to £1,311 more a year in childcare support following a 6.7% boost coming into effect tomorrow, as the government's expansion of free childcare for working parents delivers 150,000 places in a week. 

From Monday, parents on Universal Credit with one child under 17 will be able to claim up to £1,015 a month, with parents of two children or more eligible for up to £1,739 to help pay for childcare costs - up from £950 and £1,630 respectively.

The increase in support will help even more parents into work at a time when vacancies remain high, wages are rising faster than inflation, and taxes are being cut for 29 million hardworking people. 

Today's announcement comes as part of a huge package of support for working parents, including the expansion of 15 hours of free childcare a week for eligible working parents of two-year-olds for the first time. 

Over 150,000 two-year-olds are confirmed to have places for 15 hours a week of free childcare as of Friday, surpassing the take-up expectation set for early April. Thousands more places will continue to be secured over the coming weeks.

Up to 85% of childcare costs of parents on Universal Credit are covered thanks to support from the Department for Work and Pensions, which has increased since last summer by £368 for parents of one child, and £631 for parents with two or more. 

Today's announcement is part of the government's long-term plan to give working families a brighter future, by ensuring the cost of childcare is no longer a barrier for parents who want to work. 

Helping parents into work is one of the best ways to drive down the number of children living in poverty, as children living in workless households are over six times more likely to be in absolute poverty than children in a house where all the adults work. 

Work and Pensions Secretary Mel Stride said:

“This big boost to childcare support will help even more parents step into the world of work and secure long-term financial security. 

“We are delivering on our plan to get people into jobs, as we cut taxes, drive down inflation, and put money back into the pockets of hardworking families.”

When fully rolled out, eligible working parents, including those on Universal Credit, will receive 30 hours of free childcare from the end of maternity leave to when their child starts school. Parents taking up the full 30 hours will save an average of £6,900 per year on childcare costs. 

We are taking significant steps to ensure the childcare sector is prepared to deliver this rollout, including a £100 million capital investment for more places, much higher average government funding rates than the average market rates paid by parents for the new entitlements, and a significant national recruitment campaign and £1000 cash incentive for new joiners to the sector.

In 2024-25 alone, we expect to provide over £1.7 billion to support local authorities and providers deliver the expansion to the early years entitlements.

On top of this, almost half a million families are set to benefit from our changes to the High-Income Child Benefit Charge, taking 170,000 families out of paying the High-Income Child Benefit Charge altogether with families gaining an average of £1,260 from these changes. 

This includes raising the threshold for the High-Income Child Benefit Charge from £50,000 to £60,000 as well as halving the rate so that it is not paid in full until an individual earns over £80,000. We will also end the unfairness for single earner families by moving towards a household system.

As well today's boost for parents, the £2.5bn Back to Work plan will help over a million long term unemployed, sick and disabled people break down barriers to work, with the Chance to work Guarantee freeing up claimants to try work with no fear of losing their benefits. 

This comes alongside the huge amount of support offered by Jobcentres to people of all backgrounds. From upskilling, interview support and finding apprenticeships, whether you're looking for a new career or just starting in the world of work, Jobcentres across the country can give you the tools you need to start, stay and succeed in work.