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Sun, 27 September 2020

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Universal Credit childcare rules could discriminate against women, Save the Children warns

Save the Children | Save the Children

5 min read Partner content

Design flaws in the way Universal Credit supports families with childcare are forcing single mums to fork out up to £1,400 a month in nursery bills, before waiting up to a month to be reimbursed, according to new analysis by Save the Children.


New figures, based on data from a Freedom of Information request made to the Department for Work and Pensions, reveal that women are hardest hit by the flawed system: 81% of parents receiving childcare support through Universal Credit are single mums.

More than 35,000 single mums currently receive help with childcare through Universal Credit in England, compared with only 1,000 dads. But parents have to pay the costs out of their own pockets first and wait until the end of the month to get the payment.

With bills as high as £1,000 a month on average for a full-time place for a one-year-old in England, mums up and down the country are being left out of pocket for weeks, to the tune of £40 million a month.

Mums interviewed by Save the Children said paying upfront had left them constantly in arrears, forcing them to borrow on credit cards, cut back on food and other essentials or even resort to high-interest loans to stay afloat. Some have even had to turn down better jobs because they couldn’t find cash for childcare in advance.

Last week, single mum Nichola Salvato was given permission by the High Court to proceed with a legal challenge against the Department for Work and Pensions over the upfront payment rule. Her claim, backed by Save the Children, alleges that the system is unlawful and discriminatory.

Ayo, a mum of one from London, had to resort to food banks to feed her two-year-old daughter after she had to borrow £1,590 to pay for childcare, plus a nursery deposit of £200.  She said:

“I’ve gone into quite a bit of debt to pay for my daughter’s nursery fees. I’ve had to use my credit card to pay for them a few times, and I’ve fallen into rent arrears because once I’ve paid the nursery, I can’t afford the full rent.  I’ve also had to cut down on essentials like groceries. I’ve gone down to one meal a day, so I usually only have lunch and everything else we have in the house is for my daughter.”

“The system doesn’t work. The upfront fees are deterring a lot of women from going back to work, because where are they going to get that money from? You don’t find that kind of money down the back of the sofa -- it’s unrealistic.”

“I’m happy with my career and I don’t feel like I should be punished for working. It’s sad that women like me have to make choices not to have kids or give up on their careers because the system is flawed.”

Childcare is already the biggest barrier to work for women. A recent survey by the Department for Education found that 60% of non-working mums with children under five would prefer to work if they could arrange childcare that was convenient, reliable and affordable. Forcing mothers to pay sky-high childcare bills upfront will deter them from working altogether, Save the Children warns.

Becca Lyon, Head of UK Child Poverty at Save the Children said:

"As a society, we believe women should have the same opportunities to work as men. But not only are women already shouldering most of the burden of childcare, they’re now being unfairly penalised by a system which makes it even more difficult for them to go back work.”  

“Mums tell us they have taken out loans to pay for childcare or that they’ve had to turn down better paid jobs or more hours because under Universal Credit parents have to wait a month to get the support they’re entitled to. Not only does this new system unfairly disadvantage women, it could also undermine the whole point of Universal Credit – to help more parents into work and boost their pay.” 

“We would like to see the government giving parents the money they are entitled to for childcare under Universal Credit before they need to pay their nursery or childminder, instead of leaving them in arrears. The Budget this week is a chance to improve the system before more parents, especially mothers, are pushed into debt and hardship. Now is the time to act.” 

There are 44,000 households in England currently getting help with childcare through Universal Credit. This is set to rise to half a million families when Universal Credit is eventually rolled out.

Carolin Ott from law firm Leigh Day, who are representing Nichola Salvato’s challenge in the High Court, said:

“Rather than dismantling the barriers to allow single mothers to work, the requirement to pay childcare upfront is placing significant obstacles in their path. We have seen examples where this has forced women to reduce the hours they are working, incur significant amounts of debt or even feel forced to give up work entirely.

“The DWP continues to refuse to rethink its approach to the policy, despite the substantial amount of evidence which shows its disproportionate and detrimental effect on women and their families. Our client, who has recently been given permission to proceed with her legal challenge by the High Court, is arguing that the policy is discriminatory and irrational.”  

The government says parents can get help with upfront costs though the Flexible Support Fund (FSF) – a discretionary back-to-work grant which can be used to cover the first month’s childcare costs. But this only pushes the problem back by a month, leaving parents facing a huge upfront bill in the second month. The grant is also only available to people starting a new job: parents returning from maternity leave or starting to pay for childcare for the first time don’t qualify.

Read the most recent article written by Save the Children - Government must urgently put forward a package of measures to support struggling parents

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