Working parents should be helped with childcare costs by raising the cap on what they can claim back under Universal Credit, as figures suggest just 13 per cent of those eligible are claiming support.
The Local Government Association is calling for the cap on claiming for childcare costs – which has remained the same since 2005 despite the cost of childcare soaring (more than doubling in London) – to be increased in line with inflation in this week’s Spring Budget.
Working households in receipt of Universal Credit are able to claim back 85 per cent of childcare costs up to a maximum of £646.35 for one child, or £1,108.04 for two or more children, per month.
The LGA, which represents councils across England, says raising the cap could help struggling households during the cost-of-living crisis.
It comes as recent research has found that in 99 per cent 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.
Latest figures also suggest over 713,500 eligible earning parents from a total of 823,600, who receive Universal Credit, are not even claiming for childcare costs, raising concerns over the complexity of using and accessing the system.
The LGA is calling on government to review this and also address the further challenge claimants face by having to pay childcare costs up front in full before being able to claim it back.
Cllr Louise Gittins, Chair of the LGA’s Children and Young People Board, said:
“Access to childcare is vital for all families, especially for those on the lowest incomes, the most disadvantaged children, women and single-parent families.
“Childcare enables people to work, increase their hours, or take on new opportunities, as well as move out of poverty and most importantly improve families’ and children’s long-term life chances.
“But the UK has one of the most expensive childcare systems in the world, which is impacting on many low-income families at a time when the cost-of-living has rocketed.
“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 next week’s 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 to get support. This should be urgently looked into to assess whether more parents could be getting the help they desperately need.”
