Free childcare expanded and Universal Credit childcare cap boosted in Spring Budget
30 hours of free government-funded childcare a week will be extended to working parents of children aged as young as nine months in England, the Chancellor has announced in his Spring Budget speech.
In addition, parents on Universal Credit will see the maximum amount they can claim per week for childcare costs boosted from £646 to £951 for one child and £1,108 to £1,630 for two or more children – and the money will be available upfront.
Here, Which? explains the new measures to help working families save on childcare costs and when they will be available.
Free childcare hours extended to parents of younger children
Currently, parents can get up to 30 hours of free childcare for their three and four-year-old children for 38 weeks a year.
But under new plans revealed by Jeremy Hunt in the Spring Budget, the 30 hours of free childcare a week initiative is being expanded to cover all parents with children aged nine months up to school age in England.
The extra help will be available in phases:
- From April 2024 working parents of two-year-olds will be able get 15 hours of free childcare per week.
- From September 2024 working parents of children aged nine months to two years will get 15 hours of free childcare per week.
- From September 2025 all eligible working parents of children aged nine months to three years will be able to access 30 free hours per week.
The help will only be offered to households where all adults are working at least 16 hours.
The Chancellor said the package was worth an average £6,500 saving for a family with a two-year old child using 35 hours of childcare a week.
- Find out more: tax-free childcare and other ways to save
Universal Credit childcare element boosted
Currently, the childcare element of Universal Credit covers 85% of childcare costs, up to a maximum of £646.35 per month for one child, or £1,108.04 for two or more children.
But under Hunt's plans, the amount parents on Universal Credit can claim back on childcare will rise to £951 per month for one child and £1,630 for two or more children.
Families on low incomes will also be offered upfront payments rather than asked to make a claim for reimbursement, in a move to encourage more people to use the system.
The government has said the changes would come into affect this summer, but did not confirm which month.
To qualify for the childcare element of Universal Credit, both of you must be in work if you're part of a couple, unless one of you has limited capability for work, regular and substantial caring responsibilities for a severely disabled person or are absent in prison, hospital or residential care.
- Find out more: Universal Credit explained
Are you worried about your finances?
Other Spring Budget initiatives to help improve childcare
The other government proposals to help families out with childcare included:
- trialling incentive payments of £600 for childminders joining the profession, or £1,200 if they join through an agency
- £289m to boost wraparound childcare in England, so all children can access 8am-6pm childcare provision in their local area
- the minimum staff to child ratio changing from 1:4 to 1:5 for two-year-olds in England from September 2023. This will remain optional
- £204m funding to nurseries from September 2023, rising to £288m in 2024-25 to help deliver the free hours offer in England.
Find out more: all the major Spring Budget 2023 announcements
