The Department for Work and Pensions (DWP) is set to change Universal Credit rules to allow claimants from larger families to claim an extra £736 per additional child in childcare costs. The change, to be confirmed before April under the Labour government led by Andy Burnham, will increase the current support which allows working claimants to reclaim 85 per cent of their childcare costs.
Current childcare support limits
Under existing DWP rules, the amount of childcare costs that can be claimed back is capped at £1,071 per month for one child or £1,836 per month for two or more children. The new change will mean that for each additional child beyond the first, families can claim an extra £736 per month, reducing the financial burden on larger families.
A DWP spokesman told the I newspaper: “By the end of this financial year, universal credit childcare support will change so larger families are not penalised for moving into work.” This confirms the government's intention to adjust the system by the end of the current financial year.
Reaction from childcare and charity groups
Sarah Ronan, executive director of the Early Education and Childcare Coalition (EECC), said: “Childcare support should be an enabler of opportunity, not an obstacle to it, yet that’s the situation we have with the current system. We know that government investment in childcare works and makes a difference for those who can access it, but as this research shows, it’s simply not reaching the people who would benefit the most. That is holding back children, parents and the economy at a time of rising prices and low growth. The Prime Minister recently spoke about focusing on the essentials we all need to live a good life, whether that’s water or transport. For parents, childcare is one of those essentials.”
Ruth Talbot, senior policy and research manager at the Save the Children charity, said parents with three young children face nursery costs that are “way beyond” the limit if they get a job. She said: “It will make a huge difference to those who are already claiming universal credit but just can’t claim as much as they need and are struggling. But it also means people who aren’t using universal credit childcare because they can’t work because of the childcare costs now may feel that employment is a possibility for them.”
Impact on families and employment
The change is expected to benefit working parents who claim Universal Credit, particularly those with multiple children. By increasing the monthly cap per additional child, the DWP aims to make work more affordable for larger families, potentially enabling more parents to enter or remain in employment without being deterred by high childcare costs.
A DWP spokesperson said they are “determined to break down the barriers that prevent people from returning to work, ensuring families can access the childcare support they need to build financial security”. The confirmation of the change is expected before April, and it will apply to all Universal Credit claimants with childcare costs, with the additional £736 per child available for each child beyond the first.
