More parents on universal credit who go to work will get their childcare costs paid upfront under the Government’s new child poverty strategy.
And, for the first time, working parents on benefits will get help with nursery fees for all their children.
Sir Keir Starmer’s Government said the strategy would lift 550,000 children out of poverty by the end of the decade through welfare measures, reforms to temporary accommodation, and a crackdown on the cost of baby formula.
Ministers began work on the child poverty plan just days after Labour came to power in July last year, but the document was delayed by wrangling over the future of the two-child benefit cap.
In last week’s Budget, Chancellor Rachel Reeves opted to scrap the cap, paving the way for the strategy to be released.
One of the biggest changes are new rules aimed at helping working parents on universal credit (UC) access childcare.
From next year, the rules will change to make it easier for new parents who receive the benefit to get back to work, by extending eligibility for upfront childcare costs to those returning from parental leave.
Homelessness minister Alison McGovern – formerly at the Department for Work and Pensions – told The i Paper that the reform would help parents who currently have to pay childcare costs upfront and then claim them back through UC.
“Universal credit was created with the idea it would help people into work, and for parents that is really, really important, because we know that once parents are in work, the chances of their kids growing up in poverty, falls off a cliff,” she said.
“Universal credit already had a facility there for parents to claim back the costs of childhood, but anybody who has tried to make the system work knows that it wasn’t working very well.
“We’ve got to make the system work better and make sure that people aren’t having to pay out loads of money to claim it back. Because if you’re on a low income, are you going to have loads of cash? No you’re not. So helping to get upfront costs is really important.”
Upfront payment for childcare costs is already available to working families on UC in some cases.
Help for parents with more than two children
To help parents with more than two children get into work, those claiming the benefit will, for the first time, be able to receive support with care costs for all their children.
Currently, the amount of UC childcare that families with two or more children can claim back is capped at £1,768.94 a month.
Under the changes, eligible parents will now receive up to £737.06 for each additional child beyond the second.
This can be used to cover costs with any registered childcare provider, including nurseries, pre-schools, breakfast clubs and after-school clubs, childminders, nannies and some holiday clubs.
The Government has faced criticism for increasing benefits spending by £9.3bn in the Budget, while imposing a “stealth tax” on workers by freezing income tax thresholds until 2031.
However, in an interview with The i Paper, Technology Secretary Liz Kendall, who co-chairs Labour’s child poverty taskforce, said attacks on the Budget for scrapping the two-child benefit cap reflect “ignorance”.
Help for families living in B&Bs
On housing, the strategy vows to end the unlawful placement of families in bed-and-breakfast temporary accommodation beyond the six-week limit.
A total of £8m will be invested in pilot schemes to reduce emergency accommodation, in 20 local authorities with the highest use of B&Bs for homeless families.
The Government will also provide £950m, through the local authority housing fund, for up to 5,000 homes for better temporary accommodation by 2030.
A new legal duty will be introduced for councils to notify schools, health visitors and GPs when a child is placed in temporary accommodation, so they can be supported.
Lowering the price of baby formula
To cut the cost of living, the Government is promising guidance for retailers to lower the price of baby formula.
According to ministers, a combination of the guidance and new rules allowing families to use loyalty points, vouchers and gift cards to buy formula could save parents up to £540 in a baby’s first year.
Questions remain over how ministers will force shops to do this.
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Starmer said: “Every child deserves the best possible start in life, with their future no longer determined by the circumstances of their birth. Yet too many children are growing up in poverty, held back from getting on in life, and too many families are struggling without the basics: a secure home, warm meals, and the support they need to make ends meet.
“I will not stand by and watch that happen, because the cost of doing nothing is too high for children, for families, and for Britain.
“This is a moral mission for me. It’s about fairness, opportunity, and unlocking potential. Our strategy isn’t just about reversing the failures of the past, it sets a new course for national renewal, with children’s life chances at its heart.”
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