Poorer working parents are to be given more help with the costs of childcare as part of this week’s budget, after warnings that support for them has been severely eroded, and that claiming it is too complicated.
Parents eligible for help through universal credit will now be given childcare funding upfront, while it is understood that the amount they can claim will increase by hundreds of pounds. However, the budget will also contain more obligations on such parents to search for work and there will be a general tightening of sanctions aimed at those on welfare.
The extra help for childcare costs comes after an outcry from local government. Councils across England have joined calls for more support, amid concerns that only 13% of parents are claiming the falling level of support they are entitled to receive.
Under the current universal credit system, working households can claim back 85% of childcare costs up to a maximum of £646 a month for one child, or £1,108 for two or more. However, the cap has remained the same since 2005, despite childcare costs more than doubling since then in some cities, including London.
It means that, in 99% of local areas, the average price of a full-time nursery place for a child under two is higher than the maximum costs supported through universal credit and the benefits system.
In a major pitch ahead of the budget, the Local Government Association (LGA), the main body for councils in England, has backed a significant increase in the cap in line with inflation. It is also demanding a major publicity campaign after the most recent figures showed 713,500 eligible parents from a total of 823,600 are not even claiming childcare costs.
View image in fullscreenA ‘March of the Mummies’ protest over childcare provision in London last year. Photograph: Aaron Chown/PA
“The UK has one of the most expensive childcare systems in the world, which is impacting many low-income families at a time when the cost of living has rocketed,” said Louise Gittins, chair of the LGA’s children and young people board. “The cap on childcare support for working parents receiving benefits has not changed in almost 20 years, while childcare costs have more than doubled during that time. We feel it would be only fair and right for the cap to be increased in line with inflation in [the] budget.
“It is also worrying that hundreds of thousands of eligible parents are not claiming any childcare support. That may be their choice, or it could be down to difficulties they have accessing the system. This should be urgently looked into to assess whether more parents could be getting the help they desperately need.”
The size of the childcare package in the budget remains unclear. While Treasury insiders accept that childcare costs have become a big issue that is preventing people returning to work, some of the more expensive options for helping parents have already been rejected.
The idea of extending 30 hours of free childcare to one- and two-year-olds in England is said to have been rejected on cost grounds, after being presented to the chancellor as an option by education department officials. The plan would cost about £6bn, roughly equivalent to a penny increase in income tax.
‘It’s cheaper to not work’: childcare shortage in England puts strain on parentsRead more
Under the current system in England, some poorer households qualify for 15 hours of free childcare for two-year-olds. All households get 15 hours childcare for three- and four-year-olds, and some families with working parents qualify for 30 free hours.
The chancellor, Jeremy Hunt, said: “Those who can work, should work, because independence is always better than dependence …. For many people, there are barriers preventing them from moving into work – lack of skills, a disability or health condition, or having been out of the jobs market for an extended period of time. I want this back-to-work budget to break down these barriers and help people find jobs that are right for them.”
Labour is also targeting childcare as a big part of its manifesto at the next election. Bridget Phillipson, the shadow education secretary, has said that reforming the childcare system would be her “first priority in government” and that the current level of free hours were inadequate. However, the party has yet to spell out its exact plans.
