Treasury urged to make childcare more affordable for working families

Stormont's finance minister says affordable childcare is "essential" to driving economic growth

Stormont's finance minister has called on the Treasury to make childcare more affordable for working families in the Autumn Budget.

Chancellor Rachel Reeves has already said that she is considering tax rises and spending cuts in the Budget, on 26 November.

John O'Dowd said that "further austerity measures must not be taken which place an unfair burden on people, businesses or public services".

He wants the tax-free childcare support rate to rise from 20% to 30% and for the annual cap of £2,000 per child to be reviewed.

"Affordable childcare is essential to improving labour market participation and driving economic growth," he added.

O'Dowd said he had also asked that the Autumn Budget be used to reverse the two-child benefit cap.

John O'Dowd wants the tax-free childcare support rate to rise from 20% to 30%

As well as childcare, the finance minister warned that reducing the local growth funding - used for supporting people into employment, education and training, and helping local businesses - will "severely impact impact the community and voluntary sector's ability to deliver vital services, particularly for those furthest from the labour market".

"The assembly has sent a clear and united message that we stand with the community and voluntary sector and that there must be an urgent change in approach," the Sinn Féin minister said in a statement.

O'Dowd said he has "pressed the chief secretary to work with the Ministry of Housing, Communities and Local Government to reconsider the funding profile, which is currently heavily weighted towards Capital".

"Without a change in approach the British Government is putting front-line jobs, vital services and projects and programmes that support those furthest removed from the labour market getting back into work at risk."

The minister also called for a change in the VAT rate to support the hospitality sector.

Government 'committed to engagement'

In response to O'Dowd's comments, a UK government spokesperson said: "The government is providing a record settlement of £19.3 billion per year on average for the Northern Ireland Executive between 2026‐27 and 2028-29.

"As agreed in the Interim Fiscal Framework, this includes a needs-based factor of 24% for new funding in recognition of Northern Ireland's greater relative need for public services."

The spokesperson said that it is for the Northern Ireland Executive to determine how this funding is spent.

"In addition, the secretary of state for Northern Ireland has previously made it clear that the NIO is working in close partnership with the Northern Ireland Executive and Ministry of Housing, Communities and Local Government to implement and develop the new Local Growth Fund," they said.

The spokesperson said the UK government is "committed to engagement with stakeholders in Northern Ireland to help implement a package of funding that meets local needs and delivers impact".

As announced at the Spending Review, from 2026-27 the UK government will provide targeted, long-term local growth funding to support growth across Northern Ireland, once the UK Shared Prosperity Fund ends in March 2026.

More information on the development of the Local Growth Fund in Northern Ireland and engagement plans is due to be set out soon.