The increase in Universal Credit childcare payments means parents can claim up to £951 a month for one child or £1,630 for two or more, to cover the cost of childcare while they work.

This is an increase of 47% from the previous limits, which were £646 for one child or £1,108 for two or more children. The Universal Credit childcare boost was announced last month and takes effect from today.

The Government is also helping eligible parents cover the costs for the first month of childcare when they enter work or increase their hours. Many low-income families struggle with upfront childcare bills, making it harder for them to work.

Those parents will now receive up to 85% of those childcare costs back before their next month’s bills are due – meaning they should have money to pay a month’s childcare in advance.

Mel Stride, secretary of state for work and pensions, said: “We are supporting thousands of parents to return to work, progress their careers and boost their finances while making sure they have affordable childcare.

“By removing one of the biggest barriers to work for parents in Britain we are giving families the chance of a better future while doubling down on this Government’s pledge to grow the economy and bear down on inflation.”

More than two million parents are on Universal Credit, with many struggling to afford childcare to enable them to work.

Expanding free early education

From April 2024 there will be 15 free hours childcare available for working parents of two-year-olds, followed by 15 free hours from nine months in September 2024, and 30 free hours from nine months to the start of school from September 2025.

The hourly rates paid to providers to deliver the Government’s free childcare offer for two-year-olds will increase by 30% in September, up to an average rate of £8.

Claire Coutinho, minister for children, families and wellbeing, said: “We are delivering the largest ever expansion of free early education in England to make sure parents are able to access the high-quality, affordable childcare that they need.

“A working parent using 30 hours of childcare a week could save an average of £6,500 a year thanks to the new free hours offer alone.

“Parents might be surprised just how much support they’re eligible for – check all the details on our dedicated Childcare Choices website.”

The Government is also seeking to boost the early years workforce. It is consulting on ways to encourage more people to consider childcare as a career, including new apprenticeships.