The Chancellor announced a £4bn expansion of free childcare in the Spring Budget on 15 March 2023, according to Toynbee Hall, which said the plan would provide an extra 30 hours a week to parents of one and two year old children1. The same announcement included a change to how childcare costs are paid to people on eligible benefits, and tougher sanctions for people on Universal Credit1.
Toynbee Hall, an independent charity, said the Government "will also now start paying childcare costs upfront for those on eligible benefits, replacing the current scheme of paying and claiming a refund"1. The existing childcare costs through Universal Credit route required claimants to pay first and claim money back, which Toynbee Hall said "risked pushing families into debt"1.
"The Chancellor's announcement provides a £4bn expansion of free childcare that would provide an extra 30 hours a week to parents of one and two year-old children"
The charity said the childcare expansion "will be rolled out in phases from April 2024" and that this "needs to be brought forward"1. It also said the Budget "has maintained the freeze on support towards housing costs for private renters"1, and cited research that average private rents "have topped pre-pandemic levels across the capital, having risen by an average of 15.8% and 25% across England"1.
On sanctions, Toynbee Hall said the Government "has announced today that they will be bringing in tougher sanctions on people on Universal Credit, in spite of a range of evidence showing that sanctions are counterproductive and harmful"1. Details of how the sanctions regime would change, and the rates and thresholds involved, are not set out in the source.
Why it matters for households
Parents of one and two year olds are the group named as gaining the extra 30 hours a week, with the expansion phased from April 20241. The upfront payment of childcare costs applies to households on eligible benefits, replacing pay-and-claim, though the source does not list the benefits covered or the date the change takes effect1. Households already claiming help through the Universal Credit childcare element are affected by the switch in payment method; the separate Tax-Free Childcare scheme is not mentioned in the source.
Private renters on benefits are affected by the continuation of the freeze on support towards housing costs, which Toynbee Hall said will "result in a shortfall and increase the risk of homelessness"1. The housing element of Universal Credit is the mechanism through which that support is paid. The source gives rent increases of 15.8% in London and 25% across England but does not date them beyond saying rents have topped pre-pandemic levels1.
What happens next
The free childcare expansion is to be rolled out in phases from April 20241. No start date is given for upfront childcare payments or for the tougher sanctions1. Toynbee Hall said renters from across the UK would go to Westminster on Tuesday 21 March for a Renters Day of Action1.
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