Working parents who claim Universal Credit are expected to get more help to pay for childcare costs in Wednesday's budget, in a move that could save families hundreds of pounds.
Reports suggest Chancellor Jeremy Hunt will announce that the Government is set to start paying childcare costs up front, after charities have warned the current scheme of paying and claiming a refund risks people getting into debt. There are around 5.8m people who claim Universal Credit, and 40% of those are in employment
Currently, those who work and have their wages topped up by Universal Credit are eligible to claim up to 85% of their childcare costs back from the Government, but the costs have to be paid upfront and parents then have to claim a refund. With average full-time nursery fees costs running at around £263 per week and £228 for a childminder, according to the National Childbirth Trust (NCT), parents can struggle to return to work as they have to find the first month's fees in advance before getting any support.
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Mr Hunt is also expected to announced that the maximum amount people can claim for childcare on Universal Credit will be increased by several hundred pounds. The current support has been frozen at £646 a month for one child and £1108.04 for two or more for 18 years, meaning it has not kept up with the rising cost of care. The Sun has reported that the maximum cap for claims per month is now expected to increase to £950 for a single child and £1,680 for two.
According to the Organisation for Economic Cooperation and Development (OECD), the cost of childcare in the UK is among the most expensive in the world, taking up on average nearly 30% of the income of a couple with two young children. Family and childcare support group Coram, which carries out a childcare survey every year, said many families across the country struggled to work and afford childcare, along with other rising bills.
Its latest survey was published last week, and the report says it lays bare the urgency of the need for childcare change. "We have run this survey since 2001 and it is normal to see parents hit by significant price rises," it said. "But it is cause for particular concern this year as parents grapple with the stark consequences of inflation and a steep rise in the cost of living. Many families are facing the paradoxical situation where they can’t afford not to work but childcare costs mean that they can’t afford to work."
The childcare announcement will be part of the Government's package of measures to encourage people back to work. Announcements also are expected to be made around benefit claimants being asked to attend more meetings with work coaches and attend skills boot camps to help them get back to work, according to the BBC.
The "back to work" plan will also aim to get over-50s in employment, as well as people with disabilities and those on long-term sickness. The Chancellor said: "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. "We need to plug the skills gaps and give people the qualifications, support and incentives they need to get into work."
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