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WATCH: Upfront childcare payments are forcing mothers out of work, parents warn MPs

Pictured left to right: Vikki Waterman, Nichola Salvato, Gemma Widdowfield

Save the Children

5 min read Partner content

Three working mums warned MPs this week that having to cover upfront childcare payments when receiving Universal Credit is shutting parents, and especially mums, out of the workforce.

Nichola, Gemma and Vikki – all working single mothers and parent campaigners with Save the Children UK – gave evidence to the Work and Pensions Committee on 2nd March, as part of an inquiry into the childcare element of Universal Credit.

Currently, working parents who receive Universal Credit can get 85 per cent of childcare costs back, up to a certain limit. But parents must pay the full costs themselves and then claim the money back. With average childcare costs standing at over £1,000 per month, many parents on low incomes cannot afford these upfront payments.

For many, the requirement forces them to take on debt, cut back on other essentials, rely on family and friends for support, or give up work altogether.

Nichola Salvato is a single mother who was forced to cut back her hours because of the upfront payment requirement. She has taken the government to court over the issue, and is currently seeking to appeal the case before the Supreme Court.

She said: “I got a new job in 2018 and, although I was working full-time, I couldn’t afford my upfront childcare costs. I quickly got trapped in a cycle of debt, constantly owing money to my childcare and loan providers.

“After several months, overwhelmed by the effort of juggling work, debt and childcare, I cut my hours in order to reduce my childcare costs. I’ve been campaigning on this issue since then because I don’t want other parents to go through the same experience I did. Too many mums are at risk of being forced out of work by high childcare fees and upfront payments.”

Cost of living crisis

Save the Children is highlighting that childcare is an important consideration in the growing cost of living crisis.

Since February 2020, immediately before the first lockdown, the number of parents claiming the childcare element of Universal Credit has increased by nearly half (48%). At the same time, the cost of childcare has risen dramatically as providers struggle to cope with the cost of lockdown.  

Research conducted this month by YouGov on behalf of Save the Children showed that more than half (51%) of parents who have paid for childcare in the last 6 months say that their childcare costs have risen during that period, and that almost one in ten parents (9%) had cut back on food, heating or other essentials to pay for childcare. More than a fifth (22%) of parents on Universal Credit did not return to work after having children due to the cost of childcare.

Vikki struggled to afford her upfront childcare costs when she returned to work. She was forced to borrow money from family and friends to cover the fees, and eventually had to leave her childcare provider because she couldn’t afford it, and take a period of unpaid leave while she searched for an alternative.

She said: “What we’re asking is to be able to work and provide for our families. But the current system makes that harder instead of easier. We’ve been campaigning on this issue for years and not seen any change. As families face more pressure than ever, we need action from the government to fix this problem for good.”

For too long, the unnecessary hurdle of upfront childcare costs has been stopping parents, and especially mothers, from progressing in their careers

Gemma is a single mum to four-year-old Poppy. Although she works for a local authority, she still struggles to manage on a single income, particularly now that prices are increasing.

She said: “Like many parents, I find that my childcare bills fluctuate from month to month, falling when there are school holidays and rising when there aren’t. This means that I regularly have to cover the shortfall out of my wages, which is always a struggle. But now it’s harder than ever because food, fuel and energy prices are all going up and Universal Credit has been cut, so there’s nothing left over to cover upfront childcare costs.”

Dan Paskins, Director of UK Impact at Save the Children, said:

“Childcare costs are a major factor in the cost-of-living crisis that’s pushing families to the brink. With the combined effects of inflation, rising provider costs and the impacts of the pandemic, many families will be struggling more than ever with their childcare. 

“It’s been clear for years that the system of upfront childcare payments in Universal Credit is a huge problem for families on low incomes. But the government has refused to take the straightforward action needed to support families and help parents to get back into work. 

“If the UK government really wants to help people back into work, then this is the place to start. For too long, the unnecessary hurdle of upfront childcare costs has been stopping parents, and especially mothers, from progressing in their careers. We wholeheartedly support our parent campaigners as they demand change from MPs.”

Making childcare work

The parent campaigners, with Save the Children, are calling for reform of how childcare works in the social security system. 

In the long-term, the organisation wants childcare to be removed from Universal Credit altogether and managed using a dedicated system, similar to the one used for the Tax-Free Childcare Allowance available to parents on higher incomes. 

In the interim, measures should be introduced to ensure parents can cover the first month of childcare costs, through reform of the Flexible Support Fund. This should be introduced immediately to protect families from hardship, debt and being shut out of work in the months ahead.

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