Budget day: Finance expert helps struggling parents on childcare changes to expect

Chancellor Jeremy Hunt is due to deliver his budget this Wednesday, pledging to take action to reduce the cost of childcare, in an effort to support people getting back into work. 

In response to this, I have spoken with leading financial expert Sarah Connelly at Cashfloat https://www.cashfloat.co.uk/ who has responded to the proposed plans saying “it’s a step in the right direction” as the government is set to change the way it provides childcare support to parents on universal credit, switching from refunding childcare costs to an advance payment. Furthermore, the current cap of £646 per month per child is likely to be raised by a few hundred pounds, though an exact figure has not yet been revealed. 

Sarah Connelly, has further commented on the overriding importance of tackling growing childcare costs:

“While any support to reduce the cost of childcare is welcome, the Chancellor’s budget plans are likely to be a drop in the bucket compared to the overall cost of childcare; with many claiming it needs to be entirely scrapped and a new process to be instigated. The government has a long way to go before families are able to affordably access the kind of quality child care they need. If the government is truly committed to reducing the cost of childcare, it needs to make a much bigger investment in the sector.

This could involve increasing the availability of subsidies and tax credits, as well as providing more funding for providers to ensure they can offer lower prices. Ultimately, it is essential that the government takes a holistic approach to reducing the cost of childcare, as it is a key part of enabling parents to participate in the workforce.”

With changes coming, Cashfloat has detailed how to check if you’re eligible for Universal Credit and how to apply to avoid missing out. 

To be eligible, you must live in the UK, be aged 18 or over (with some exceptions for those aged 16-17) and have a total of £16,000 or less in savings and investments. If you are out of work, working (including self-employed or part-time), or unable to work due to a health condition, you may be able to receive Universal Credit.

You can check what benefits you might be entitled to by using an independent, free and anonymous benefits calculator such as charity Turn2us whose calculator provides an estimate of the benefits you could receive, the amount, and how it’ll be impacted if you start working or increase your hours, or if your circumstances change.

If you are in work, Universal Credit can help with the costs of childcare, no matter how many hours you work. If you are eligible and meet the additional conditions, you could receive up to 85% of your childcare costs – a maximum of £646.35 per month for one child or £1108.04 per month for two or more children. At the moment this support is paid in arrears, meaning you will typically pay the costs upfront and then Universal Credit will reimburse you. 

Once the budget is delivered, there will be greater transparency as to whether those already on Universal Credit need to do anything to ensure this automatic payment. 

Sarah Connelly has provided 3 top tips on reducing childcare costs where possible:

1. Contact local community centres to learn more about childcare and activities available for you. Many towns have children centres that offer weekly events, some of these are free while others may require a small fee. To find out more, look on local Facebook pages or the website of your local authority. 
2. Where possible, parents could join forces with other parents to provide childcare, sharing the responsibility and offloading the burden on those who can’t afford associated fees or might not have family to help. 
3. Grandparents in Britain are estimated to provide an average of 10 hours of weekly childcare for their grandchildren. Those grandparents caring for children under the age of 12 may be eligible for national insurance credits which could provide a boost to their state pension.

Credit to https://www.cashfloat.co.uk who supplied the above post.